The Case For A Less Restrictive Oil Import Policy - Introduction

There are three parties to the oil imports controversy: the domestic oil producers, whose side has just been ably summarized by Mr. Jameson; the oil importers; and the public. Domestic producers and importers are both motivated by economic self-interests, that is by their natural and legitimate desire for profit maximization, in their respective positions. Thus, domestic producers, rightly, regard every barrel of imported crude oil (with the exception of some specialty crudes) as a displacement of a barrel of their own crude. Hence, the lower the import Level the better they like it. Conversely, U .S. refiners whose plants are located at the seaboard or at certain inland waterways generally welcome a higher level of imports because refiner profits are based primarily on the spread between the crude oil price and the refined products price, since crude oil represents by far the refiner?s largest cost factor. The relatively low cost of foreign oil means therefore higher profits to those refiners able to process such oil, This applies particularly to integrated companies whose own domestic oil production is insufficient, to meet their refinery requirements but who have developed ample low-cost foreign oil supplies.