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Geopolitics, Global Patterns of Oil Trade, and China¡¦s Oil Security Quest

Author

Listed:
  • Sergey Mityakov

    (Clemson University)

  • Heiwai Tang

    (Tufts University and Hong Kong Institute for Monetary Research)

  • Kevin K. Tsui

    (Clemson University and Hong Kong Institute for Monetary Research)

Abstract

Does China's quest for oil raise tensions with the United States? This paper examines the effect of international relations on global oil trade patterns. Using voting records for the United Nations General Assembly to measure the state of international relations, we estimate a modified gravity model in a panel data framework over the period 1962-2000. Our presumption is that a divergence in voting patterns reflects misalignment in political interests among pairs of states, and hence an increase in "political distance." Controlling for oil exporters' endowment, potential supply disruption due to civil conflict, other standard gravity controls, as well as exporter and year fixed effects, we first show that private energy companies based in the United States import significantly less crude oil from US political opponents. The result is robust to controlling for economic sanctions and militarized interstate disputes, suggesting that the political oil import diversification is more than a wartime phenomenon. A similar oil import pattern is observed in China, in which case only a few national oil companies control the oil sector. While the incentives to diversify are stronger for both the United States and China when the exporters are nondemocratic, import sanctions have opposite effects on oil imports into the United States and China. Finally, we document that there is no such oil import pattern in other non-major power oil importing countries.

Suggested Citation

  • Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2011. "Geopolitics, Global Patterns of Oil Trade, and China¡¦s Oil Security Quest," Working Papers 322011, Hong Kong Institute for Monetary Research.
  • Handle: RePEc:hkm:wpaper:322011
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kashcheeva, Mila, 2013. "Political limits on the world oil trade : firm-level evidence from US firms," IDE Discussion Papers 401, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. An, Haizhong & Zhong, Weiqiong & Chen, Yurong & Li, Huajiao & Gao, Xiangyun, 2014. "Features and evolution of international crude oil trade relationships: A trading-based network analysis," Energy, Elsevier, vol. 74(C), pages 254-259.
    3. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2012. "InternationalPolitics and Import Diversification in the Second Wave of Globalization," Discussion Papers Series, Department of Economics, Tufts University 0770, Department of Economics, Tufts University.
    4. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2013. "International Politics and Import Diversification," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 1091-1121.

    More about this item

    Keywords

    Energy Security; International Relations; Oil Trade Diversification;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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