How we became a net petroleum exporter again
posted at 10:58 am on December 19, 2011 by Jazz Shaw
This one will probably come as a surprise to many of you. Despite the best (read: worst) efforts of the Obama administration and the counter-intuitive nature of what you’re paying for gas and heating bills this winter, the United States is on track to be a net exporter of petroleum products for the first time in more than half a century.
The U.S. exported more oil-based fuels than it imported in the first nine months of this year, making it likely that 2011 will be the first time since 1949 that the nation is a net exporter of such goods, primarily diesel.
That’s not all. The U.S. has reversed another decades-long trend. It began producing more crude oil in 2008 than the year before and accelerated that upswing 3% in the first nine months of this year compared with the same period in 2010. That production has helped reduce U.S. imports of crude oil by about 10% since 2006.
“It’s dramatic. It’s transformative,” Edward Morse, a former senior U.S. energy official who now directs global commodities research at Citigroup, says of the historic shifts. He says the U.S. is importing a smaller share — 49% in 2010, down from 60% in 2005 — of the oil it uses, adding: “We’re moving toward energy independence.”
Before we start jumping for joy here, it’s important to note that these figures include all exports of any petroleum based products, not just what we drill here at home. Two factors accounted for the lion’s share of this shift, and one of them is the increasing quantity of oil sands based products which we import from Canada and refine. Large amounts of that, particularly diesel, are then resold and exported.
The second factor is the boom we’ve seen in seen in the extraction of oil (along with natural gas) in shale deposits, particularly in North Dakota, Montana and Texas. Additional strain on domestic supplies has been relieved by the falling price of natural gas as we open up more supplies in Pennsylvania, Ohio and elsewhere. A number of manufacturing interests, such as steel production, have been increasingly turning to natural gas to cut production costs, making their products more competitive and lowering demand for crude oil products.
Crude oil production is still far below where it could be, given the stingy nature of the Obama administration when it comes to drilling permits and oil lease auctions, but even that has been on the rise. The industry has managed to fight its way back to a great degree, producing jobs and reducing our dependence on foreign sources, even as they fight with their own government. Imagine where we could be if Washington wasn’t trying to throttle the flow by holding up the Keystone XL pipeline or constantly pushing job killing bills like The FRAC Act which would restrict horizontal drilling and development of previously untenable resources.
Of course, as the study notes, no matter how much progress we make, we’re probably never going to get back to the production / consumption ratio we had in the 70’s. But that doesn’t mean that we still can’t do a lot better than we are now. In 2010 we only imported 12% of our oil from Saudi Arabia, down from 19% in 1993. And with just a little less interference from the government, we can drive that number down further still.