WHETHER carrying a cargo of Arabian Heavy from the Persian Gulf
or Sumatran Light from the South China Sea, captains may guide
their supertankers to 29 degrees 45 minutes north, 95 degrees 20
minutes west - coordinates for the port of Houston.
This city of plate-glass corporate towers is known worldwide as
the capital of the oil industry. While the business is downtown,
the actual oil can be found a dozen miles east, where a different
sort of skyline rises above the humid, coastal flatlands.
Along 25 miles of the chocolate-colored Houston Ship Channel
stand refineries, chemical plants, tank farms, and pipeline
terminals - $17 billion-worth of steel structures that make Houston
the No. 1 petroleum port in the No. 1 petroleum-consuming nation.
Last year, world output of oil reached 65 million barrels a day.
The United States produced 13 of every 100 barrels but had to
import just as much to meet its demand for gasoline, jet fuel, home
heating oil, and other uses. About 10 percent of US petroleum
imports, more than 800,000 barrels a day, pass through Houston.
In fact, 60 percent of the world's oil is shipped somewhere by
sea, owing to the disparity between where oil is produced and where
it is needed. A fleet of 3,000 tankers and innumerable barges
accomplish the task.
Single oil market
In the 1980s, oil began to be traded much like other
commodities. Private, long-term agreements gave way to what, in
effect, is a single market in which all participants know the price
and quantity of everyone else's transactions. As a result, any
event that affects oil supply somewhere in the world causes the
price of oil to rise or fall everywhere.
For example: Will the Northern Hemisphere's winter be unusually
cold? Will the United Nations allow Iraq to resume exports of oil?
When the Organization of Petroleum Exporting Countries (OPEC) meets
in November, will it decide to stick to its 24.52 million-barrels
per day production ceiling? Will Russia scrap its "special
exporter" system of channeling oil exports through a handful of
The same factors that affect price also govern traffic and
operations at the Houston port. Consider that the price of oil
floundered in 1993, ending the year just above $12 a barrel,
one-third of its price in the early 1980s. That allowed non-oil
exporters Germany and Japan to earn a place last year among the top
five exporters to Houston in dollar value. Saudi Arabia, the
world's leading oil exporter, ranked a mere third.
Still, in tons of cargo, the top five exporters to Houston were
all oil-producers: Saudi Arabia, Venezuela, Mexico, Kuwait, and
Algeria. And as a category, petroleum and petroleum products
dominated Houston imports with 45. …