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

HKIMR Working Paper No. 32/2011

29 Pages Posted: 26 Oct 2011  

Sergey Mityakov

Clemson University - John E. Walker Department of Economics

Heiwai Tang

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); CESIfo

Kevin K. Tsui

Clemson University - John E. Walker Department of Economics

Date Written: October 26, 2011

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.

Keywords: Energy Security, International Relations, Oil Trade Diversification

JEL Classification: F13, F51, F59, Q34

Suggested Citation

Mityakov, Sergey and Tang, Heiwai and Tsui, Kevin K., Geopolitics, Global Patterns of Oil Trade, and China’s Oil Security Quest (October 26, 2011). HKIMR Working Paper No. 32/2011. Available at SSRN: https://ssrn.com/abstract=1949670 or http://dx.doi.org/10.2139/ssrn.1949670

Sergey Mityakov

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

HOME PAGE: http://people.clemson.edu/~smityak/

Heiwai Tang

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

CESIfo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Kevin Tsui (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

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