Geography Reference
In-Depth Information
regional trade agreements encourage movement of pro-
duction within the trade region and promote trade by
diminishing (or deleting) trade quotas and tariffs among
member countries. A regional trade agreement sets up a
special free trade agreement among parties to the associ-
ation, leaving nonmember countries to trade through the
rules of the WTO or an existing bilateral agreement.
Whether regional or global, trade agreements directly
affect the location of production and even what is pro-
duced in a place.
Regulations at the state and local scales matter as
well. Not infrequently, the location of industrial opera-
tions is infl uenced by a range of state and local regulations
that infl uence the cost of production. These range from
tax regulations to environmental and safety standards. In
many cases, governments actively seek to recruit industry
through incentives that include tax breaks, subsidies, and
exemptions from particular bureaucratic requirements.
Export processing zones such as the
maquiladoras
dis-
cussed in Chapter 10 provide a case in point. There are
now many hundreds of such zones around the world, and
they are shaping the global geography of industry.
U.S. consumption of petroleum and natural gas
today is about 20 percent of the annual world total. By
2007, the United States required more than 20.6 million
barrels of petroleum per day to keep its power plants,
machinery, vehicles, aircraft, and ships functioning.
However, U.S. production of oil in recent years has aver-
aged about 10 percent of the world total, and even includ-
ing the known Alaskan potential, U.S. oil reserves are esti-
mated to amount to only about 4 percent of the world
total. More so than many countries, the United States taps
the oil that it has. In 2009 the country was the third largest
oil producer in the world (Fig. 12. 12). Even with this level
of production, the United States remains heavily depen-
dent on foreign oil supplies, with all the uncertainties that
involves. There is, consequently, a push for the United
States to expand offshore drilling in the hope of expand-
ing its production of oil. Many oppose the idea on envi-
ronmental grounds, however, pointing to the major BP oil
spill that occurred in the Gulf of Mexico in 2010 as an
example of what can happen when offshore oil resources
are exploited without careful safeguards.
The United States leads world demand and con-
sumption not just in oil, but in natural gas as well. As
Figure 12.8 shows, natural gas often occurs in association
with oil deposits. The use of natural gas has increased
enormously since World War II. One result of the
increased use of natural gas is the proliferation of pipe-
lines shown on the map. In North America in 2006, there
were over 4 million kilometers (2.5 million miles) of pipe-
lines, including parts of a new pipeline designed to carry
Alaskan natural gas across Canada to the U.S. market.
Countries with large reserves of oil and natural
gas—Saudi Arabia, Kuwait, Iraq, Russia, and others—
occupy a special position in the global economic pic-
ture. None of these countries except Russia is a major
industrial power, but they all played a key role in the
industrial boom of the twentieth century. And while oil
has brought wealth to some in Southwest Asia, it has
also ensured that outside powers such as the United
States and Great Britain are involved and invested in
what happens in the region. This set of circumstances
has produced an uneasy relationship (at best) between
countries in the oil producing region and the major
industrial powers of the “West.”
Energy
During the mid-twentieth century, the use of coal as an
energy source in industry increasingly gave way to oil and
gas. Dependence on external fuel supplies affects three of
the four world industrial regions that were the principal
regions of industrial development during the mid-twentieth
century. Despite discoveries of oil and gas in the North
Sea, Europe still depends on foreign shipments of petro-
leum. The United States has two neighbors with substan-
tial fossil fuel reserves (Mexico's oil and gas may rank
among the world's largest), but its own supplies are far too
limited to meet demand. Japan is almost totally dependent
on oil from distant sources.
The role of energy supply as a factor in industrial
location decisions has changed over time. Earlier in the
chapter, we explained that at the start of the Industrial
Revolution manufacturing plants were often established
on or near coal fi elds; today major industrial complexes
are not confi ned to areas near oil fi elds. Instead, a huge
system of pipelines and tankers delivers oil and natural
gas to manufacturing regions throughout the world. For
some time during and after the global oil supply crises of
the 1970s, fears of future rises in oil costs led some indus-
tries that require large amounts of electricity to move to
sites where energy costs were low. When the crisis waned,
national energy-conservation goals were modifi ed, and in
the early 2000s the United States' reliance on foreign
energy resources was even greater than it had been in the
1970s. Energy supply has become a less signifi cant factor
in industrial location, but securing an energy supply is an
increasingly important national priority.
New Centers of Industrial Activity
As a result of advances in fl exible production, over the last
30 years many older manufacturing regions have experi-
enced
deindustrialization
, a process by which companies
move industrial jobs to other regions, leaving the newly
deindustrialized region to work through a period of high
unemployment and, if possible, switch to a service econ-
omy (see the last major section of this chapter). At the same