The Changing Structure of the International Oil Market

During the past decade, oil producers have taken title to oil produced in their own countries, and the role of the major oil companies is now limited primarily to marketing, distribution, and refining operations. GAO evaluated the changing structure of the international oil market and its impact on continued access to crude oil.

GAO found that, since the governments of producing countries have extended their control over a significant portion of the world oil supply, consuming countries' ability to respond quickly and effectively to disruptions will be curtailed. The major oil companies have reacted to producer-oriented changes by reducing, and in some cases terminating, sales to unaffiliated suppliers. The governments of oil-consuming countries have taken three basic approaches in response to the changes in the oil industry: (1) collective initiatives, such as founding the International Energy Agency; (2) bilateral steps, such as direct government involvement in securing supplies; and (3) oil reserve or stock management activities. The U.S. market-oriented system appears to have adjusted to the changes and its access to foreign crude oil has continued to be relatively constant. However, the United States continues to be dependent on foreign oil and its dependence could increase dramatically if the current economic downturn is reversed and there is a slowing down of conservation and alternative fuel efforts. GAO concluded that the international petroleum industry as a whole has proven resilient to these changes and remains the principal marketer of crude oil and refiner of producing countries' oil.