Import Dependency

The United States continues to sit at the top of the national rankings of importers, now accounting for around a quarter of total world imports.   Yet its import dependency, the percentage of demand met by imports, is significantly lower, at about 50 percent, than that of its international partners.   Industrialized countries such as Japan and Germany have import dependency levels of 90-100 percent.

The Middle East has long been regarded as politically unstable and its oil supply, therefore, subject to disruptions.  U.S. policy makers have viewed its increased dependence on Western Hemisphere supplies and its decreased dependence on the Middle East as a welcome development.  (Again, an international contrast: the Asia-Pacific region now relies on the Middle East for almost 90 percent of its imports and hence 50 percent of its consumption.)

As the Middle East holds the majority of the world’s oil reserves, increasing U.S. dependence on this region had been viewed as the inevitable partner of import growth.   In light of the shift toward Western Hemisphere, short-haul import sources, Saudi Arabia is the only significant Middle East supplier left, and then only because of its willingness to trade security for revenue.  Yet, although U.S. dependence on the long-haul Middle East has fallen sharply, this has not made U.S. prices less vulnerable to a disruption in Middle East supplies. Since oil is a global market, the relevant measure for that vulnerability is not U.S. dependence, but world dependence on Middle East oil and that has not shrunk.

While interdependence in the Western Hemisphere has been a major United States policy objective, it is important to realize that this combination of size and geographic closeness creates its own short-term vulnerability.  Take for instance the case of Hurricane Roxanne, which severely damaged a large part of Mexico’s production facilities in the Gulf of Mexico in late 1995. Some 40 million barrels of Mexico’s production was eliminated, the vast majority earmarked for refineries along the U.S. Gulf Coast.  These refiners, less than a week’s sailing time away, had little time to compensate for this sudden hole in their planned supplies.

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