{ "id": "R45493", "type": "CRS Report", "typeId": "REPORTS", "number": "R45493", "active": true, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 597204, "date": "2019-04-23", "retrieved": "2019-12-20T19:22:35.385782", "title": "The World Oil Market and U.S. Policy: Background and Select Issues for Congress", "summary": "The United States, as the largest consumer and producer of oil, plays a major role in the world market. Policy decisions can affect the price of oil and petroleum products (e.g., gasoline) for U.S. consumers and companies operating in U.S. oil production, transportation, and refining sectors. Congress considers policies that can affect the world oil market, including trade, sanctions, protection of trade routes, the Strategic Petroleum Reserve (SPR), and alternative fuel standards.\nTechnological advancements, supportive policies, and other aspects of the U.S. oil industry have reversed a multidecade downward trend in U.S. oil production. In 2018, U.S. oil production nearly doubled compared to 2008. The United States is also the number one consumer of crude oil and refined petroleum products in the world. The pricing of crude oil contributes to the price consumers pay for petroleum products in the United States.\nCongress has maintained an interest in oil policy. Following the 1973 Organization of Arab Petroleum Exporting Countries (OAPEC) oil embargo, Congress passed the Energy Policy and Conservation Act of 1975 (EPCA; P.L. 94-163). In response to rapid price escalation and perceived scarcity, the EPCA, among many other things, restricted U.S. produced crude oil exports. As the oil sector evolved, Congress has amended the EPCA. The Consolidated Appropriations Act, 2016 (P.L. 114-113) repealed Section 103 of the EPCA removing any restrictions to crude oil exports.\nSupply, demand, price, and other factors all combine and interact with one another to create the world oil market. Saudi Arabia, historically, has been the world\u2019s leading oil producer and along with the Organization of the Petroleum Exporting Counties (OPEC) has held enough spare capacity to influence global oil supply and prices. World oil demand typically follows world economic conditions. Oil prices are set in the world market and are primarily a function of supply and demand fundamentals, but also a number of other factors, such as quality, location, and transport infrastructure availability (e.g., pipelines). While the world oil market historically follows the world economy, supply generally does not follow demand smoothly and this results in price volatility. As economies grow, so too does the demand for crude oil and petroleum products, including fuels, paints, lubricants, and plastics. China and India are forecasted by the International Energy Agency (IEA) to contribute a large portion of oil demand growth, representing around 20% of total world demand by 2023. Asia, by IEA\u2019s forecast, will remain a net importer of crude oil through 2023. \nOil policy can be influential as a response to or in anticipation of undesirable international behavior or as a means to bring balance and stability to an otherwise volatile market. OPEC, especially in conjunction with other major producers (e.g., Russia), can exert influence on the oil market. Several bills introduced in the 115th Congress addressed the U.S. relationship with OPEC, such as the No Oil Producing and Exporting Cartels (NOPEC) Act of 2018 (H.R. 5904 and S. 3214). The United States has utilized the oil market as a political tool. National oil companies (NOCs) operate under government ownership or are companies under influence by national governments. The United States, by placing sanctions on crude oil and crude oil-related industries, can send a message to those governments (e.g., Iran). Physical threats to oil supply still exist, particularly along certain trade routes. For instance, roughly 24% of the world oil market transited the Strait of Hormuz in the first half of 2018. A disruption to world supply along trade routes could permeate into geopolitical relationships, secondary industries (e.g., petrochemicals, agriculture), and the economy at large.\nThe United States plays a multifaceted role in the world oil market, which may affect policy decisions for Congress. Congress has in the past enacted legislation to promote a stable, reliable supply of oil. For example, the EPCA created the SPR and established the Corporate Average Fuel Economy (CAFE) standard for vehicles, in part, as strategies to reduce U.S. exposure to future supply disruptions. Additionally, Congress has enacted legislation to diversify transportation fuels, including tax credits for electric vehicles and the Renewable Fuel Standard. As the oil market continues to evolve, Congress may want to consider these and other major policy options that could include international trade policies, infrastructure, diversification of transportation fuels, and funding in research and development.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R45493", "sha1": "b8835c7a19025a8884c495ee04369736ec96bc3f", "filename": "files/20190423_R45493_b8835c7a19025a8884c495ee04369736ec96bc3f.html", "images": { "/products/Getimages/?directory=R/html/R45493_files&id=/2.png": "files/20190423_R45493_images_072ef71093544edc267d5cdb5989068b3e9446d2.png", "/products/Getimages/?directory=R/html/R45493_files&id=/4.png": "files/20190423_R45493_images_ce781e05bd0cba88b932391b42da7708a245c7a2.png", "/products/Getimages/?directory=R/html/R45493_files&id=/5.png": "files/20190423_R45493_images_5aefff9640795469a3c8916356bc05afd0a6ae20.png", "/products/Getimages/?directory=R/html/R45493_files&id=/8.png": "files/20190423_R45493_images_fedf0091becadf11c38b45dd4cfcf0c6a1270fd2.png", "/products/Getimages/?directory=R/html/R45493_files&id=/1.png": "files/20190423_R45493_images_8ca4c7fb7e856019bac8bd60b215e51a08d443b7.png", "/products/Getimages/?directory=R/html/R45493_files&id=/7.png": "files/20190423_R45493_images_5a0e3268c7fa5b1106005134d752cf4f0613fe3a.png", "/products/Getimages/?directory=R/html/R45493_files&id=/3.png": "files/20190423_R45493_images_46d4a8171f0f7ece42d3f12f246d44e7148e3dce.png", "/products/Getimages/?directory=R/html/R45493_files&id=/6.png": "files/20190423_R45493_images_f27ef5c2c4b7ecdf86247d37eaeea3b89454ecbc.png", "/products/Getimages/?directory=R/html/R45493_files&id=/0.png": "files/20190423_R45493_images_86f012ccd49c983b37c692459d012d3bf7d7cc80.png" } }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R45493", "sha1": "23befc02944540fd2f24a888a80c5a3ffe0b26e9", "filename": "files/20190423_R45493_23befc02944540fd2f24a888a80c5a3ffe0b26e9.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4780, "name": "Energy & Natural Resources Trade & Economics" }, { "source": "IBCList", "id": 4812, "name": "Fossil Energy" }, { "source": "IBCList", "id": 4813, "name": "International Energy & Natural Resource Issues" }, { "source": "IBCList", "id": 4907, "name": "Energy Policy" } ] }, { "source": "EveryCRSReport.com", "id": 590948, "date": "2019-02-04", "retrieved": "2019-04-17T14:24:08.400751", "title": "The World Oil Market and U.S. Policy: Background and Select Issues for Congress", "summary": "The United States, as the largest consumer and producer of oil, plays a major role in the world market. Policy decisions can affect the price of oil and petroleum products (e.g., gasoline) for U.S. consumers and companies operating in U.S. oil production, transportation, and refining sectors. Congress considers policies that can affect the world oil market, including trade, sanctions, protection of trade routes, the Strategic Petroleum Reserve (SPR), and alternative fuel standards.\nTechnological advancements, supportive policies, and other aspects of the U.S. oil industry have reversed a multidecade downward trend in U.S. oil production. In 2018, U.S. oil production nearly doubled compared to 2008. The United States is also the number one consumer of crude oil and refined petroleum products in the world. The pricing of crude oil contributes to the price consumers pay for petroleum products in the United States.\nCongress has maintained an interest in oil policy. Following the 1973 Organization of Arab Petroleum Exporting Countries (OAPEC) oil embargo, Congress passed the Energy Policy and Conservation Act of 1975 (EPCA; P.L. 94-163). In response to rapid price escalation and perceived scarcity, the EPCA, among many other things, restricted U.S. produced crude oil exports. As the oil sector evolved, Congress has amended the EPCA. The Consolidated Appropriations Act, 2016 (P.L. 114-113) repealed Section 103 of the EPCA removing any restrictions to crude oil exports.\nSupply, demand, price, and other factors all combine and interact with one another to create the world oil market. Saudi Arabia, historically, has been the world\u2019s leading oil producer and along with the Organization of the Petroleum Exporting Counties (OPEC) has held enough spare capacity to influence global oil supply and prices. World oil demand typically follows world economic conditions. Oil prices are set in the world market and are primarily a function of supply and demand fundamentals, but also a number of other factors, such as quality, location, and transport infrastructure availability (e.g., pipelines). While the world oil market historically follows the world economy, supply generally does not follow demand smoothly and this results in price volatility. As economies grow, so too does the demand for crude oil and petroleum products, including fuels, paints, lubricants, and plastics. China and India are forecasted by the International Energy Agency (IEA) to contribute a large portion of oil demand growth, representing around 20% of total world demand by 2023. Asia, by IEA\u2019s forecast, will remain a net importer of crude oil through 2023. \nOil policy can be influential as a response to or in anticipation of undesirable international behavior or as a means to bring balance and stability to an otherwise volatile market. OPEC, especially in conjunction with other major producers (e.g., Russia), can exert influence on the oil market. Several bills introduced in the 115th Congress addressed the U.S. relationship with OPEC, such as the No Oil Producing and Exporting Cartels (NOPEC) Act of 2018 (H.R. 5904 and S. 3214). The United States has utilized the oil market as a political tool. National oil companies (NOCs) operate under government ownership or are companies under influence by national governments. The United States, by placing sanctions on crude oil and crude oil-related industries, can send a message to those governments. Physical threats to oil supply still exist, particularly along certain trade routes. For instance, roughly 24% of the world oil market transited the Strait of Hormuz in the first half of 2018. A disruption to world supply along trade routes could permeate into geopolitical relationships, secondary industries (e.g., petrochemicals, agriculture), and the economy at large.\nThe United States plays a multifaceted role in the world oil market, which may affect policy decisions for Congress. Congress has in the past enacted legislation to promote a stable, reliable supply of oil. For example, the EPCA created the SPR and established the Corporate Average Fuel Economy (CAFE) standard for vehicles, in part, as strategies to reduce U.S. exposure to future supply disruptions. Additionally, Congress has enacted legislation to diversify transportation fuels, including tax credits for electric vehicles and the Renewable Fuel Standard. As the oil market continues to evolve, Congress may want to consider these and other major policy options that could include international trade policies, infrastructure, diversification of transportation fuels, and funding in research and development.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R45493", "sha1": "e563b8a65607589c63a460546873d6c9b5be1803", "filename": "files/20190204_R45493_e563b8a65607589c63a460546873d6c9b5be1803.html", "images": { "/products/Getimages/?directory=R/html/R45493_files&id=/2.png": "files/20190204_R45493_images_072ef71093544edc267d5cdb5989068b3e9446d2.png", "/products/Getimages/?directory=R/html/R45493_files&id=/4.png": "files/20190204_R45493_images_ce781e05bd0cba88b932391b42da7708a245c7a2.png", "/products/Getimages/?directory=R/html/R45493_files&id=/5.png": "files/20190204_R45493_images_5aefff9640795469a3c8916356bc05afd0a6ae20.png", "/products/Getimages/?directory=R/html/R45493_files&id=/8.png": "files/20190204_R45493_images_fedf0091becadf11c38b45dd4cfcf0c6a1270fd2.png", "/products/Getimages/?directory=R/html/R45493_files&id=/1.png": "files/20190204_R45493_images_8ca4c7fb7e856019bac8bd60b215e51a08d443b7.png", "/products/Getimages/?directory=R/html/R45493_files&id=/7.png": "files/20190204_R45493_images_5a0e3268c7fa5b1106005134d752cf4f0613fe3a.png", "/products/Getimages/?directory=R/html/R45493_files&id=/3.png": "files/20190204_R45493_images_46d4a8171f0f7ece42d3f12f246d44e7148e3dce.png", "/products/Getimages/?directory=R/html/R45493_files&id=/6.png": "files/20190204_R45493_images_f27ef5c2c4b7ecdf86247d37eaeea3b89454ecbc.png", "/products/Getimages/?directory=R/html/R45493_files&id=/0.png": "files/20190204_R45493_images_86f012ccd49c983b37c692459d012d3bf7d7cc80.png" } }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R45493", "sha1": "cff3a10a52285c48997577df2775dc219be2f056", "filename": "files/20190204_R45493_cff3a10a52285c48997577df2775dc219be2f056.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4780, "name": "Energy & Natural Resources Trade & Economics" }, { "source": "IBCList", "id": 4812, "name": "Fossil Energy" }, { "source": "IBCList", "id": 4813, "name": "International Energy & Natural Resource Issues" }, { "source": "IBCList", "id": 4907, "name": "Energy Policy" } ] } ], "topics": [ "Appropriations", "Energy Policy", "National Defense" ] }