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It also does not seem particularly likely in undemocratic countries, because the rulers of those countries are primarily interested in one thing: cash. They will send their domestic oil to where it earns the most money, and in general that will be the international market.
Of course it is automatically true that a country's exports equal is production minus its internal consumption (neglecting any imports). The test of "export land" is whether the per capita consumption of major oil exporters is increasing significantly faster than other comparably wealthy countries around the world.
- they are mature economies, with fairly low energy consumption per unit of GDP anyway, and
- their prevailing ideology does not lend itself to protectionist economic policy.
But it's easy enough to demonstrate the truth of the model on a case by case basis with the major oil exporters (Russia, Saudi, Venezuela, etc...) where oil-product prices are indeed subsidised in order to promote economic growth.I'm not saying this is smart policy, but it's clear that it's happening.
Canada is bound by NAFTA treaty to supply the US on an equal basis to Canada-- the oil flows south from Alberta, not East to Toronto (largely: there are still some refineries in Sarnia, Ontario, near Detroit). Quebec and the Maritime Provinces import their oil.
The UK is, AFAIK, similarly bound to supply oil on equal terms to its EU trading partners, although in practice in 1973 and the oil embargo it was 'every man for himself'. But the price will be set by outside world prices-- no one imagines a UK government would be stupid enough to try to control the domestic price of oil.
PS
Interesting to learn that a plan to seize the Gulf Oil assets was going round Washington and Whitehall in 1973:
http://news.bbc.co.uk/1/hi/world/middle_east/3333995.stm
I agree with you in general, but want to add one qualifier. There is one thing autocratic regimes like more than cash, and that is staying in power.
Iraq had an enormous fuel subsidy when Saddam was still in power. That is changing now, and people are pissed off about it. In short, the rulers have to balance the desire for cash with the need to quell popular unrest, which threatens their regime.
A couple of scenarios are possible:
- despots in exporting countries will tolerate declining exports (rising internal consumption) since the declining oil remaining for export will push up oil prices enough to satisfy their greed.
- The need for cash will get the upper hand and they will back off on subsidies and try to control or suppress public unrest. This reaction would maintain the amount of oil available for export, or at least it wouldn't drop as fast as the Export Land model would predict
Which one should we expect? It obviously depends on what country you are talking about, the severity of any popular backlash to rising oil prices, and a million other factors. In short, it's anybody's guess.Demand destruction is going to occur primarily in the economies that do not benefit from higher energy prices because there will be a massive transfer of wealth from the importers to the exporters. However this only looks at it from a national perspective. The average Canadian is going to be hurting in the wallet just as much as an average Amererican. The big winners are going to be the oil companies and associated industries, their employees, their stock holders and the (Alberta) government.
While you raise some good points what evidence do you have to make the following statement?
"They will send their domestic oil to where it earns the most money, and in general that will be the international market" Does this really depend on the relative purchasing power of the domestic consumer (per capita GDP?)
Secondly exports and imports of oil will also be detrmined by the quality of the oil. Eg In Australia the oil is very light despite declining production much is exported as it is too light to refine into heavier products. So oil such as Tapis and Arab Crude is imported to make gas, diesel and bitumen products.
Thirdly there are long term contracts. Not everything is sold on the spot market to the highest bidder. They may well have to honour these contracts first they may be domestic customers on the other hand they could be export cutomers.
Fourthly distance from markets affects where crude is sourced and where it is sold. For example there are places in the world that it does not make sense to ship oil half way around the world when a local source is close at hand. Consumers rely on more local producers as transport costs impact on input cost.
As for your blanket generalisations about democracy, they are foolish.
An oil exporting country will be enjoying positive trade balance and a strong currency as a consequence. The result is that for the domestic consumption oil will remain relatively cheap even though the price may be rising for the oil importing countries.
The same thing is happening now with the US. Oil is realtively expensive for the US residents, but it is hardly felt outside of the US, because of the weakening dollar.