Measuring Economic Markets for Imported Crude Oil*

Abstract

A previous paper by Weiner (1991) noted that many policy issues involving crude oil imports hinge on whether crude oil markets are unified or regionalized. Weiner observed that the literature on crude oil markets has paid little attention to the regionalization issue. However, a generalized literature addressing market delineation has been evolving for some time and recent advances in applied time series analysis have produced multivariate testing procedures which avoid most of the problems of the bivariate price correlation analyses previously employed in analyzing regionalization issues. This paper advances the work of Weiner by incorporating cointegration relationships into multivariate time series models and using these models to examine the extent of regionalization in the world market for crude oil imports. The empirical results reported here lend support to Adelman's characterization of the world oil market as “one great pool” (Adelman 1984).

Keywords

Oil imports US Energy policy Cointegration market regionalization

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