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Robert Rapier

Robert Rapier

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No, The U.S. Is Not A Net Exporter Of Crude Oil

Last week Bloomberg created quite a stir with this story: The U.S. Just Became a Net Oil Exporter for the First Time in 75 Years. I have seen a number of follow-up stories that praised the significance of this development, but others laughed it off as misleading or incorrect.

There is some truth to both viewpoints. Yes, the headline is somewhat misleading and requires some context. But there continues to be a trend in the direction of energy independence for the U.S. So, today I want to break down the numbers so readers can understand the truth about U.S. petroleum production, consumption, and exports.

Domestic Crude Production Has Surged

The Bloomberg story is based on data from the Energy Information Administration (EIA). Each week the EIA publishes detailed statistics on U.S. oil production, consumption, exports, and inventories in a report called the Weekly Petroleum Status Report. So, let’s go straight to the source.

For the week ending 11/30/18, the EIA reported that the U.S. produced 11.7 million barrels per day (BPD) of crude oil. That represents a 2 million BPD increase from the year-ago number. This number is generally accepted even by those who believe the Bloomberg headline was misleading.

Further down in the report, the category of Products Supplied is listed at 20.5 million BPD. This is approximate U.S. crude oil consumption for the week. Thus, as some skeptics of the story suggested, the bottom line is that the U.S. is burning more than 20 million BPD while producing less than 12 million BPD. Thus, the conclusion for some was that the U.S. isn’t close to being energy independent.

Other Supply

But there is important context between these numbers. First, the 20.5 million BPD is a fairly accurate representation of U.S. consumption, but there is a large U.S. production number that isn’t included in the crude oil production numbers. Related: Will China Turn Its Back On U.S. LNG?

There is a line item called Other Supply, which consists primarily of natural gas liquids (NGLs) and fuel ethanol. This category represents a significant input to refiners in addition to the 11.7 million BPD of production (and the 4.0 million BPD of net crude oil imports). Other Supply represented 6.9 million BPD of production, and it mostly ends up as feedstock for refiners or petrochemical production. (Note that this category also includes “Refinery Processing Gain” of 1.2 million BPD, which results from refiners making products that are of a lower density than crude oil).

So, Domestic Production of crude oil plus Other Supply is equal to (11.7 + 6.9) = 18.6 million BPD — which is still about 2 million BPD less than the U.S. consumes.

Growing Exports

However, these numbers don’t account for exports. During that particular week, the U.S. imported 7.2 million BPD of crude oil, and exported 3.2 million BPD. Thus, net crude oil imports were 4 million BPD.

But product exports are a different story. During that week the U.S. imported 1.6 million BPD of finished products, while exporting 5.8 million BPD (which includes some ethanol and NGLs). Net U.S. exports of finished products were 4.2 million BPD. (The U.S. became a net exporter of just finished products in 2011).

The U.S. also exports crude oil. President Obama repealed the 40-year old crude oil export ban in 2015, and crude oil exports have soared since. As an aside, the reason the U.S. simultaneously imports, and exports crude is that some of what we produce isn’t a good match for our domestic refineries. So we export some domestic crude and import crude that is a better match for our refineries.

Fact Check

So, here’s a summary of the important inputs to the balance that resulted in the Bloomberg claim:

• U.S. crude oil production – 11.7 million BPD
• Other supply (NGLs, ethanol, processing gain) – 6.9 million BPD
• U.S. crude oil imports – 7.2 million BPD
• U.S. crude oil exports – 3.2 million BPD
• U.S. finished product imports – 1.6 million BPD
• U.S. finished product exports – 5.8 million BPD
• U.S. petroleum consumption – 20.5 million BPD Related: Analysts: Output Cuts To Balance Oil Markets In 2019

So the Bloomberg headline results from a net crude oil import number of 4.0 million BPD and a net finished product export number of 4.2 million BPD. So, indeed when you consider crude oil and finished products, for the week ending 11/30/18, the U.S. was a net exporter of 0.2 million BPD of crude plus finished products. (For perspective, this average over the previous four weeks was 2.0 million BPD of net imports).

Verdict: Remarkable Achievement, But False Headline

Significantly, this is the first time this category of weekly crude plus finished products became an export number since the EIA began reporting this information in 1991. This is a far cry from 2005, when that weekly number hit an all-time-high of 14.4 million BPD. As far as I can tell, Bloomberg is correct that this hasn’t happened in the past 75 years.

But that’s not what the headline claimed. The headline said “oil.” The U.S. is still a net importer of oil to the tune of 4.0 million BPD.

Further, total U.S. production of oil and other supply that is fed into refineries is 18.6 million BPD, while U.S. consumption is 20.5 million BPD. That still puts U.S. consumption at nearly 2.0 million BPD more than we produce. (It’s actually a little worse than that, because not all NGLs end up as refinery feedstock).

So the bottom line is that we aren’t net exporters of crude oil, and we aren’t energy independent. But, the U.S. has trended in that direction for over a decade. Regardless of whether it remains that way, this is undoubtedly a remarkable achievement. I know a lot of people — including myself — would have scoffed at such a prediction in 2005.

By Robert Rapier

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  • Mamdouh G Salameh on December 13 2018 said:
    No matter what spin you put on it, the United States will never be a net oil exporter and will never achieve oil independence for the foreseeable future if ever.

    The EIA in cahoots with the likes of IEA, BP Statistical Review of Energy, Financial times, Bloomberg, Rystad Energy and Reuters try to burnish the US oil outlook by promoting false stories about the United States becoming the world’s biggest oil producer, or the US is now a net exporter of oil or the US is now self-sufficient in oil. These claims reflect self-delusion and wishful thinking. And I will tell you why.

    There are two cardinal figures which determine the level of US oil imports and exports, namely US oil production and US consumption.

    In 2018 US consumption was estimated at 20.5 million barrels a day (mbd) and production is claimed by the EIA to be 11.7 mbd thus necessitating imports of 8.8 mbd. No matter how you try to manipulate US oil fundamentals, the glaring fact remains, namely the US will never become self-sufficient in oil even for one minute.

    The EIA claims that the United States exports 3.2 mbd. But they don’t also mention that an equivalent amount of imports of heavy and medium crude are imported for use by US refineries that are not equipped to refine the ultra-light tight oil, meaning there are no net exports.

    When it comes to US oil production, the EIA figure of 11.7 mbd is overstated by at least 2 mbd. It turns out that it includes NGLs which come from natural gas wells and include such things as ethane, propane, butane and pentanes. These may not qualify as crude oil. In fact, major exchanges accept neither natural gas plant liquids nor lease condensates as satisfactory delivery for crude oil. And if major exchanges don’t accept natural gas liquids as crude oil, then they are not crude oil.

    An MIT study published in December 2017 reached the conclusion that the US vastly overstates oil production forecasts and that the EIA has been exaggerating the effect of fracking technology on well productivity

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Kay Uwe Böhm on December 13 2018 said:
    After table datas of german Wikipedia Erdôl/Tabelle und Grafiken was USA 2016 nr. 1 oil importer nr. 3 producer but LNG & CNG substitution in world.

    Missed investments in new cheap real zero risk atomic power, new turbines efficiency near 100?, new thermal solar power from glas green houses etc. cooled but delivering energy not needing water and 700bar CNG from electrolyse H2 + cheap air CO2 etc.
    instead in risky outgoing shale oil !

    originator
    kayuweboehm@yahoo.de
  • Lee James on December 13 2018 said:
    Thanks for clarifying our standing on net oil. It is complicated. Due to energy politics, many citizens and certain national leaders will continue to believe that we are presently a net exporter.

    Oil is that much more right for for burning if we tell ourselves that we do it self-sufficiently, if not sustainably.

    --However the mind works best. . . .
  • Randy Verret on December 13 2018 said:
    Good article. Rather than focusing on slogans like "energy dominance" & the like, I think a more fitting idea is that we are energy interdependent. After all, we have long been actively engaged in a world market...

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