The world today runs primarily on fossil fuels.

While coal is linked directly to air pollution due to

high levels of sulfur, oil and natural gas provide a cleaner option to fueling our country. However,
these resources are not evenly distributed throughout the earth. This calls for trade, imports and
exports with both developed and developing countries. While interactions between some countries rely
on larger organizations, such as the World Trade Organization and the EU, other countries form
TIFA’s to trade with each other. Certain countries use these resources as political bargaining chips,
allowing and constricting resource flow depending on the relationship at the time. Russia has been
known to do this, and it is suspected that the US may in the future.
Russia is home to the largest natural gas reserves in the world according to ‘Hydrocarbons
Technology’. The estimated 1,688 trillion cubic feet (tcf), as of January 2013, means they hold a
quarter of the reserves in the world. Over 50% of the reserves come from Siberia, and roughly 45%
from the regions of Yamburg, Urengoy, and Medvezhye. A majority of the reserves that are in
production are in the Nadym-Pur-Taz region of upper-western Siberia. A company called Gazprom
dominates both the natural gas and oil industry in the region, producing 80% of the gas in the country.
It is also estimated to own and control 65% of the reserves.
Iran is the country with the second most natural gas reserves, producing 1187 tcf in 2012. 60%
of their reserves are offshore. South Pars is the largest known field, and it holds 27% of the gas for the
country. It produces roughly 35% of the gas for the country. For Iran, the National Iranian Oil Company
(NIOC) control the industry for natural gas.

The third ranking country is Qatar, holding 13% of the world’s reserves. It contains an estimate
of 885.3 tcf. A large majority of the fields are held in the offshore North Field, which in itself is nearly
the size of Qatar. The latest project for the field is the Barzan gas project, which is said to produce an
extra 600 billion cubic feet on top of what the country was already producing. In 2012, the production
was 5.7 tcf. Qatar Petroleum controls the gas industry, and the country as ties with Shell, Total, and
Exxon Mobile.

When it comes to oil, Venezuela holds the largest reserves for the world. In 2013, they held
297.6 billion barrels. In 2012, the production was at 2489.2 thousand barrels per day. Saudi Arabia is
the second largest, holding 267.91 billion barrels. The supply per day is roughly 11545.7 thousand
barrels. This country also holds 20% of the proven reserves in the world. Canada holds the third spot
on the list, with roughly 173.105 billion barrels in reserves. The per day supply is 3854.4 thousand
barrels. The rise in liquid fuel availability (and the decrease in pricing for the US) is partially because of
Canada’s reserves.

Natural gas goes through a process to be ready for export. It can come from three different
types of wells. Natural gas that come from oil wells is called associated gas. If the gas were to
dissolve into the oil, it would be referred to as dissolved gas. Gas that comes from gas wells is called
free gas. Condensate wells produce both gas and liquid hydrocarbons. Since natural gas contains
other hydrocarbons such as ethane, propane, and butane (among others), it isn’t considered pipeline
quality. To get there, the hydrocarbons are removed and separated to produce raw gas (Chevron
Pascagoula Refinery).

Oil takes several steps to be ready for use. Distillation occurs first, the oil is pumped through
pipes at barometric pressure or less (think of a vacuum). This process separates the light and heavy
hydrocarbons. Lighter materials like propane and butane vaporize and settle at the top of the pipe.
Gasoline, jet fuel, and diesel fuel, settle in the middle of the chamber. A tar like material settles in the
bottom. Pressure is sometimes lowered to avoid reaching the boiling point for the hydrocarbons. The
next step is cracking, heat and catalysts (this increases the rate of a chemical reaction) break or ‘crack’
the molecules into even smaller ones. Hydrotreating is a calmer version of cracking, and is used to
remove impurities like sulfur and nitrogen. This step allows for cleaner burning and less air pollution.
The last step is reforming, where oil with low octane levels are sent to have hydrocarbons change to
octane components.

International trade and investments run on free trade agreements. Free trade agreements are
signed agreements between two or more countries. They reduce the barriers such as import and
border taxes, and increase the ease of trade between countries. Barriers to the agreements make
products less diverse, slows economic growth, and lessen the resource supply of a country
(ExxonMobil). Iran signed with Total/CNCP (French/Chinese) to develop their gas fields. They signed
a 4.8 million dollar deal to develop the South Pars field. This deal is the first in over ten years with the
Islamic Republic and any other country. Trade regulations were put in place in 2006 when suspicion of
nuclear weaponry was found.

Russia has a history of using their supply of natural gas for political power. In 2009 they cut off
their supply to Ukraine. The United States could soon be a powerhouse to Mexico. Our supply has
grown substantially since 2010. This allowed trade to be more readily available and easier to access
for Mexico. Currently, Mexico nearly relies on only the United States for natural gas. Recently, due to
president Trump demanding Mexico to pay for a border wall as well as talk of imposing border tariffs,
relations have been strained between the two countries. Border tariffs would tax any and all imports
for Mexico from the United States. This could sway Mexico to look for other suppliers, considering a
border wall would make transport of natural gas difficult. Options are limited for their own country, due
to a lack of money and resources to create new plants. The old plants are both expensive to operate,
and cause higher levels of pollution.

Russia is the third largest trade partner for the EU, and the EU is the largest trade partner for
Russia. Due to an economic crisis in 2008, as well as questionable measures taken by Russia, trading
was paused between the two powerhouses. Trading resumed in 2010, and Russia joined the World
Trade Organization in 2012. The EU’s exports to Russia are machinery, transport equipment,
chemicals, medicine, and agricultural products. The main exports to the EU by Russia are raw
materials consisting primarily of oil and natural gas. Since joining the WTO, Russia has agreed and
committed to holding or lowering the export taxes on all raw material. Russia’s biggest investor and
trade partner is the EU, where they account for roughly 75% of trade and investment.

Venezuela is the 57th top exporting country in the world. They made a profit of 6.82 billion
dollars in 2015 (with exports over imports). Their top export is Crude Petroleum (oil), with an export of
roughly 24.9 billion dollars. Saudi Arabia is one of the largest middle eastern trading partners of the
US, while the United States is the country's largest trading partner. Saudi Arabia moves over a million
barrels of oil to the US market every day, making it the second largest export source for oil in the
United States. The United States and Saudi Arabia have a Trade Investment Framework Agreement.
TIFA’s provide the layout of trade between countries, including rules and possible issues that could
arise.

The North American Free Trade Agreement, otherwise known as NAFTA, allows trade to run
smoothly between the US, Canada, and Mexico. This agreement keeps trade prices as a reasonable
rate, and allows the countries involved to trade on an open market. It also stops the countries from
placing high tax on any natural resources being traded. On top of this, it requires that all resources be
available for trade between all countries. Canada has large oil reserves, and is the largest supplier for
the US (other than the United states itself, which produces roughly 40% of the countries needs on it’s
own).

According to the International Energy Agency, in 2040, it is projected that 50% of our energy
will be supplied by natural gas and oil. But, since wind and solar power only have energy hold in
electricity, that number is projected to be much higher. This is because electricity is only 45% of the
world’s energy demand. Oil is the most important and valuable fuel source, and has no clear
replacement. To put this into perspective, 90 million cars were sold in one year, and only 1% run on
anything other than oil. Natural gas is a fast growing industry, and will allow the US to reach their CO2
reduction goal with the Climate Power Plan, over a decade early.

Our capacity and growing capability to export oil and gas allows us to lower costs and compete
with OPEC and Russia. In 2018, the United States could become a net gas exporter on a natural basis.
The demand for these resources in the US isn’t growing fast enough to meet our supply, so we have
turned international. The IEA is encouraging that the US exports to Asia, where natural gas prices are
3-5 times higher. This would displace Asia’s reliance on coal, and help improve (or decrease the
worsening) of air pollution.

The Organization of the Petroleum Export Countries, or OPEC, is an intergovernmental

organization. It includes five original members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), plus
seven joined (Qatar, Libya, United Arab Emirates, Algeria, Nigeria, Angola, and Equatorial Guinea).
Indonesia suspended their membership in 2009, and again towards the end of 2016. Ecuador
suspended their membership in 1992, but reactivated in 2007. Gabon terminated their membership in
1995, but rejoined in 2016. This organization was created during the Baghdad conference in 1960,
with original headquarters in Geneva, Switzerland. Headquarters was moved to Vienna, Austria in
1965.

OPEC is in charge of securing and regulating prices of petroleum within the organization's
members. It strives to achieve efficient economies, and regular supply to nations consuming it’s oil.
They also aim for fair profit to those investing in the organization. The prices rose twice during the 70’s,
once due to the UAE embargo in ‘73, and once due to the Iranian revolution in ‘79. The market then
crashed during the ‘80’s, due to it peaking in the previous decade. During the ‘90’s, climate change
was brought into summit meetings. During these meetings, OPEC argued for realistic pricing and
usage of oil. The graph above shows oil shares controlled by OPEC, 81.5% of all proven oil reserves
are in OPEC member countries. 65% of OPEC’s reserves lie in the middle east.

On top of trade agreements, there are other barriers to entering the oil and gas sector. Startup
costs, as well as consistently high operating costs, defer most people from even attempting to enter.
There are also patents and copyrights on the technology and equipment used in the business.
Companies are also forced to comply with their governments and meet the environmental regulations.
This often costs money to do.

In the United States, there is a restriction on exporting oil outside of the US. This occurred in
the 70’s during an oil scare. The restriction bans companies from exporting to countries unless there
are free trade agreements. The Department of Energy must accept any other exports, and is
situational. The approval process creates delays that are costly to the companies.

As mentioned above, the trade of natural resources can be a very political move. We rely on
primarily fossil fuels for energy purposes. Countries that have a large abundance of these resources
have the power to dictate and decide where the resources go. In cases of war, the resources could be
cut off from the countries involved on the opposite side. Cutting off resources that the entirety of the
world needs for things such as heating, electricity, and fuel, can create struggles for those living in the
cut off countries.

Countries that do not have a substantial amount of fossil fuels will rely on other countries to
provide the fuel they need. If the trade agreement doesn’t specify the terms of agreement, or if the
supplying country changes their mind, the country could be without fuel. Another issue in the control of
trade lies in developing countries. Third world countries don’t have the monetary support to make
active and long lasting agreements for the fuels we rely on. If the country cannot pay for the fuel, they
won’t receive any. Big label gas and fuel companies may have the money to purchase oil or gas from
still developing countries, but could offer less money than they would to a fully developed country.

Since our world relies so strongly on fossil fuels, they should be widely accessible and
affordable to each country. Politics are on a different level than the majority of the population. A
handful of people make decisions for entire countries. A personal feud, arguments, and
misunderstandings shouldn’t control whether or not a country receives heat in the middle of winter.