The United States has become less dependent on crude oil imports with increased production at home. The U.S. is still a net importer of oil at this point, but the amount imported is decreasing on an annual basis. Further, oil exports to other countries are increasing.
A great deal of the increased production is due to technological advances that make shale oil drilling easier to accomplish. However, there is a ban on the export of crude oil from the U.S., except to certain markets. In the wake of increased production, some lawmakers are looking to put an end to the long-standing restrictions. This could boost exports of light sweet crude to countries and serve to increase U.S. energy independence.
Crude oil production has increased significantly over the past five years. U.S. oil production averaged 5.35 million barrels a day in 2009. By 2014, that number increased to around 8.7 million barrels, an increase of around 62%. The U.S. Energy Information Administration (EIA) expects this number to increase going forward as well.
A great deal of this increased production is from hydraulic fracking and horizontal drilling in areas such as the Bakken oil region in North Dakota. Shale oil drilling accounted for 300,000 barrels a day in 2007. By 2014, that number had risen to 2.4 million barrels a day.
Imports Vs. Exports
The U.S. is increasing its exports of crude oil despite the export ban. The U.S. imported 11.7 million barrels a day in 2009, while exporting around 2 million. This was a net import of 9.6 million barrels a day. By 2012, the imports dropped slightly to 10.6 million barrels, while exports grew slightly to 3.2 million barrels. Net imports dropped even further by 2014, with only 9.2 million barrels a day imported in 2014 and exports of 4.1 million. This was a net import of 5 million barrels a day. From 2009 to 2014, net daily imports dropped 51%. This trend is likely to continue into the future.
End of the Export Ban?
Lifting the crude oil export ban would boost exports dramatically. Congress enacted the ban on the export of oil during the Arab oil embargo. Lifting the ban would allow for more free movement of oil across borders. This may not make sense, however, since the U.S. is still a net importer of oil. This begs the question: Why not keep more crude in the country for refining?
Not all oil is of the same quality. A great deal of the increased production is of lighter or sweet crude oil. U.S. refineries are not configured to refine this type of oil; they were built to refine heavier crude. While they can refine lighter crude, it reduces the efficiency of yielding petroleum products such as heating oil, diesel oil and kerosene. It will make sense for the oil refineries to reconfigure their refining capacities to allow for the processing of sweet crude, but this takes significant capital investment.
Refineries in Europe and Asia are more properly configured to refine this type of oil, which sells at a premium on the world marketplace. However, due to the refinery mismatch, the U.S. sells it at a discount. If refining companies can get more money for the refined sweet crude, it would provide an incentive for them to make the capital investments necessary to update their refineries. Allowing the export of crude would support the manufacturing economy in the U.S. for this reason.
Much of the new oil production must currently be shipped by rail, which is more expensive than moving it by pipeline. New infrastructure making it easier to ship light sweet crude would be more attractive if that oil could be exported.