Post by the Scribe on Nov 3, 2022 9:28:38 GMT
David Moe
Former Business Analyst at Oil and Gas Industry (1970–2007)Author has 6.9K answers and 81M answer viewsJul 28
www.quora.com/What-percentage-of-US-oil-is-exported
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How can the US be an exporter and an importer of oil at the same time?
They are just trying to balance the North American refinery industry. Canadian oil sands are too heavy for most US refineries, while American shale oil is too light. So they blend the oil to get Goldilocks oil - just right. Also, the pipelines don’t run all the way across the continent, so the countries trade oil and products back and forth across the border by ship, rail, or truck.
California is totally screwed because it has no pipeline connections to the rest of the US. Neither are there any pipelines connecting Alberta to Canada’s East Coast. However, there are pipelines connecting the Alberta oilsands to the Texas oil refineries. Alberta producers are backing OPEC oil out of the Texas market by the simple expedient of cutting prices to make sales. Texas refineries are turning it into gasoline and particularly diesel fuel and selling it in Europe and Asia.
The Texas oil refineries prefer to run heavy Alberta oil because it is cheap and very similar to Venezuelan oil, which is no longer available because of sanctions. Texas producers send their lighter shale oil to the Irving refinery in New Brunswick, which happens to have the largest oil refinery in Canada, which is way too big for the Canadian East Coast Market, so it sells its products, particularly heating oil and diesel, to the NE US states. For that matter, it ships products around the US through the Panama Canal to California because… look at the price in California.
At some points in the past, Alberta producers have shipped their oil West through Vancouver, down the US West Coast, through the Panama Canal, and back up the US East Coast to New Brunswick. You have to be pretty desperate to do that, but sometimes they were. It would be a lot more efficient to just pipeline it across Canada from Alberta to New Brunswick, but Quebec has blocked that route because it doesn’t want to do anything to aid other provinces
K Vopalecky
First, petroleum companies doing business in the US import and export crude oil and refined derivatives -- not the US government.
Profits from these exports benefit the companies -- not the US, except for federal taxes.
Greg Freemyer
Science and engineering enthusiast, math guy, LNG, Nat GasAuthor has 3.1K answers and 4.9M answer viewsJun 21
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Does the US import or export more oil?
The US produces about 12 million barrels per day of crude oil, but it has refinery capacity for about 18 million barrels per day.
To keep the refineries highly utilized it has to have net crude oil imports around 6 million barrels per day.
But, US consumers only use about 12–13 million barrels per day of petroleum products (gasoline, diesel, jet fuel, propane, and butane).
Thus recently we have exported back to the world about 6 million barrels per day of petroleum products.
Thus, every year we are a net crude oil importer. And some years we are a net petroleum exporter.
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Brian Rauchfuss
Study history and the marketsAuthor has 3K answers and 608.4K answer viewsMay 6
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Why does the US export so much oil?
One reason is the Jones Act. The US has a lot of oil products available in ports in the Gulf of Mexico. The US needs them on the east coast. So obviously we should ship it in oil tankers from one to the other, right?
Unfortunately, the Jones Act from 1920 says that if you want to ship anything between US ports you need to do it with US owned, US registered, US crewed and US built ships. Oil tankers like that don’t exist, so our only choice is to export oil from the Gulf of Mexico to foreign nations and import oil from foreign nations to the east and west coasts.
There are other reasons. US oil refineries has a preferred mix of heavy/light oil, and the fracked oil produced by the US is the wrong weight. Selling fracked oil overseas and importing Middle East oil gets the mix to what they want.
Isn’t it a sign of US strength that we can refine roughly 18 million barrels per day of crude oil and much of what we refine is discounted low quality oil that we import from other countries.
That means the high quality, full price, oil produced in the US is mostly reserved for export.
If you explain in a comment why the amount of high quality US crude oil is being exported matters to you, I’ll take the time to look it up for you.
I couldn’t help myself, I looked it up.
1.08 billion barrels of US crude was exported in 2021, or about 25% of US production.
Peter Greenwood
Author has 2.5K answers and 1.1M answer viewsAug 30
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Why does the U.S. need to export oil?
The US doesn’t need to export oil. It is owned by private companies and, depending upon existing contracts, they sell their surplus on ‘the market’. ‘The market’ is a world market any anyone can bid for and win US produced oil with the highest price.
Demand is fairly inelastic, so variations in the supply e.g. Russia being cut out of the market make price variations very volatile in times of shortages. The same applies to other staple products like wheat.
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Rick O’Malley
42 years of oil & gas operations & managementAuthor has 3.6K answers and 2.7M answer views4y
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For how long is the US expected to remain an exporter of oil?
The U.S. may be an exporter of oil, but more significantly, it is still a net importer.
We produce about 10 million bpd and consume something like 18. Canada is the biggest source of imports.
From the 1970's until recently, exporting crude oil was illegal, except for some quantities that were exported from Alaska to Japan.
Through that time we were an exporter of refined products.
All that crude oil exports mean is greater flexibility for refiners to manage inventories and refine product in the place where it makes the most sense.
Those kind of inventory management decisions are way too complicated and nuanced to leave to Congress or federal regulators.
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Adam Roach
Author has 4.4K answers and 8M answer views3y
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Should the US government end oil exporting now?
There are some who suggest this but ultimately it’s not exactly an ideal scenario for anyone involved.
The cost of oil, globally, is an aggregate. It’s determined by the average cost of extraction, refinement and transport to the end user. Saudi Arabia has the cheapest oil to extract. Arabian oil is shallow and relatively clean. Libyan oil is clean but deeper down. Then there is Venezuela, which has very dirty oil, deep deep down but boat loads of it. Venezuelan oil is expensive to extract and process.
The US has ample reserves of varying quality but most of the “easy” oil has been extracted. Generally speaking that means our oil is slightly more expensive than the average which benefits from cheap Persian Gulf prices.
Now lets be serious here. Most oil in the US is not sitting on public land. It’s out at sea and sitting at the bottom of shallow small yield pumps. Oil companies are in the business of making money not securing US energy interests. Not exporting oil is bad for business. It also has the potential to disrupt global energy markets. That’s bad for everyone.
Not exporting oil is synonymous with not importing oil. That’s functionally what will happen because the US is still a major oil producer. We yank our crude off global markets the absence will be made up by foreign producers covering our gaps.
This would actually help Venezuela quite a bit. Maduro is in trouble because oil supplies are so cheap his oil is too expensive to process and ship profitably. It would also help Russia who has lots of oil but its costly to extract and move.
Whats the real benefit to the US?
The threat of dwindling reserves is real but Venezuela actually has enough oil to run the planet for 25 years, albeit at a premium price.
The US actually drives global energy policy. While we are no longer the primary consumer we are still a major consumer. The loss of primary however means that there is plenty of money to be made supplying China who is the biggest consumer now.
If and when we run out of dinosaur juice, what happens?
The obvious answer is global economic calamity but realistically it’s not going to be a full scale collapse. Many countries have been actively pursuing energy independence for 25 years and quite a few have pulled it off. Brazil makes enormous use of sugar cane ethanol, Germany has moved heavily into renewable, some went nuclear while others have eschewed nuclear for more exotic but less toxic alternatives like tidal and solar.
The US is pretty good at engineering itself out of a corner. When the black gold gets scarce its a safe bet that nuclear fusion will magically be operational pretty soon after that. Conspiracy theorists think it works now but big oil keeps it shut down.
There are 12 locations working on antimatter, that we know of, and that’s a fuel with serious potential and there is even more exotic energy forms on the theoretical drawing boards. Something will replace oil just like anaerobic oil replaced whale oil.
Hell there a whole internet subculture of conspiracy theorists that think dinosaur juice is actually a self replenishing resource and the whole oil supply structure is a scam. If that is actually true, admittedly a stretch, then hoarding our oil would be incredibly stupid.
The truth is that we consume more than we probably should. Reining in our consumption would be far better for the US in the long run than hoarding and not focusing on efficiency.
We put oil into everything, plastics, pharmaceuticals, chemicals, textiles…..it’s actually kind of ridiculous. That over reliance on a finite resource is dumb. If America is to survive the collapse of the oil based economy it won’t be through hoarding to be the last country with reserves, rather it will be by being one of the first countries to transition into the next big thing.
If energy resource control continues to be the driving geo political mechanism having the last oil reserves will be irrelevant if we don’t have the next big thing. We are already somewhat behind highly technical countries with limited fossil fuel assets now. Japan, France and Germany are on the forefront of exotic energy research and China is catching up as fast as they can.
This question actually illustrates a central problem with how Americans view energy policy in general. We tend to imagine that we will always have access and control over the dominant energy platforms of the day. That we can hoard our way into eventual dominance in a time of crisis. That’s just not realistic and we have plenty of evidence to show how true that is. When a refinery goes down, we get chaos. When a pipeline is compromised it causes massive disruptions. These are just minor bugs usually. When a hurricane like Katrina wipes out a whole depot it takes two weeks to adjust and that’s bad for business.
Fossil Fuels still have their place but it’s an aging technology in a time of rapid advancement. One where global R&D now far outstrips even the mighty US economy when everyone else is taken together.
Our over reliance on oil is actually our Achilles Heel. If we ever get to a point where oil hoarding is a serious policy objective, we will already be in serious trouble if that’s all we have. It’s not likely that the rest of the world will have boxed themselves in quite so badly because they’ve all learned to be economically adroit over the last 40 years while we tend to be too conservative with some things. Americans don’t seem to like change where many foreign states simply accept it as a feature of life.
Peter Murton
Private Oil Analyst/TraderAuthor has 2.1K answers and 1.3M answer viewsUpdated Jan 1
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Why does the US export and import crude oil at the same time?
Others have touched on most or all of the reasons, but I’ll summarize:
Proximity/ease of transportation. Not all imports are shipped all the way from Saudi Arabia. Canada is the largest exporter to the US by far, and some Americans can see Canada ‘from their porch’. It can be a whole lot cheaper to import oil from the Canadian prairies a few miles across the world’s longest undefended border to the US, than to ship it over the Rocky Mountains for example. Similarly it can be easier for the US coasts to get oil shipped in from overseas than to transport it very long distances by land. Big ships can move things remarkably cheaply these days.
Available grades. There is a major disconnect between the grades the US produces (especially the ultra-light distillates that are the main product of the US ‘fracking/shale’ revolution) and what US refineries are set up to process. There’s some debate about why this is. Shale oil is generally considered inferior quality, because it isn’t as flexible as heavier grades in terms of what can be produced from it. Grades are often mixed together, for example light shale oil might be blended with very heavy Canadian tar sands bitumen to come up with an intermediate-weight oil for convenient refining. (The heavy stuff is mostly found in Canada and Venezuela, so it is imported.)
Nationalism. A lot of US refineries are owned by the Saudis, who may have an incentive to continue buying oil from the home country.
Capitalism. Oil importers and exporters don’t make business decisions based on what is best for the country. If they can buy crude from Texas for $50 or Saudia Arabia for $40 (after shipping), and can sell crude in Texas for a $10 profit or in India for a $15 profit, they will import and export oil instead of just using American oil in the USA as would seem logical. It may seem obvious to you and me that it’s incredibly wasteful for crude tankers to be passing each other in the Gulf of Mexico importing and exporting the same thing, but if a capitalist can figure out a way to make profit on sailing a ship-full in circles for a year that is exactly what they will do!
David Moe
Former Business Analyst at Oil and Gas Industry (1970–2007)Author has 6.9K answers and 81M answer views3y
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How long can the US sustain its status as a net oil exporter since it has finite oil?
The United States hasn’t been a net oil exporter until very recently. Until this year it was a heavy net oil importer. However, its oil production has skyrocketed in recent years due to new techniques in hydraulic fracturing, and most of the oil produced in the US is now from fracked wells.
Note that this drop in imports has occurred during the last few months, and is primarily due to the US ban on imports of heavy oil from Venezuela, which used to be a major exporter of oil to the US. Fortunately this is easily replaced by similar quality heavy oil from Canada.
See: US Energy Information Administration Petroleum & Other Liquids
The problem with fracking is that the decline rate on these fracked wells is like a rocket in reverse. They can decline 70% in production in a year. The oil companies have to drill more and more wells every year just to maintain production. If they stop drilling new wells, US production will fall like a rock. I call this the “Red Queen Effect” from Lewis Carol’s “Through the Looking Glass”. See: The Red Queen Effect: Avoid Running Faster and Faster Only to Stay in the Same Place
‘Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!’
In addition, they are producing the source formations for the already exhausted reservoir formations in Texas and elsewhere. These formations have been known for up to a century, but there was no way to produce the oil from them until modern techniques in horizontal drilling and multistage horizontal hydraulic fracturing were introduced. The problem is that they are of finite size, like the producing formations they created above them, so they will also run out eventually.
Fortunately, Canada has enormous oil reserves of the same quality as Venezuela, so assuming that the necessary pipelines can be built despite environmental opposition, it can make up for declines in US production. Canada has the third biggest oil reserves in the world, much bigger than those of the US or Russia so it is no danger of running out of oil in this century, or even the next century.
US Net Oil Imports from Canada
There is a certain synergy in US and Canadian oil production, and the two countries export huge amounts of oil to each other, although Canadian net exports are much larger since the Canadian product market is much smaller.
Most American oil production from fracked wells is too light for most American refineries, while most Canadian oil is too heavy for them. If you blend the two, you get “Goldilocks” oil, which is just right.
Canada’s oil pipelines do not extend all the way across the country due to the opposition of environmental groups and certain provinces which are not interested in national unity (i.e. Quebec) so Eastern Canada imports large amounts of US oil, while the Midwestern US imports large amounts of Canadian oil because it is much cheaper than other oil. This results in cheaper fuel prices in the US than elsewhere on the planet.
For those people from California are wondering why their fuel prices are so much higher than all the other states, the North American pipeline grid does not extend into California, so it has to depend on more expensive imported oil from OPEC rather than cheap Texas oil and even cheaper Canadian oil.
Randy Weir
Author, journalist, ministerAuthor has 13.2K answers and 71.3M answer viewsSep 13
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If the United States is now a net exporter of oil and no longer imports it, why is the price of oil so high?
Our oil independence is irrelevant. Oil is a commodity so it’s price is determined by global supply and demand. Thinking American oil would be cheaper than foreign oil is like thinking that gold mined in the US is worth less than gold mined in Peru.
That said, we’ve never stopped importing oil. Our refineries can’t process the light crude we pump here, so we export it and import heavy crude that we can refine. Being a net exporter doesn’t mean we don’t import. It just means we export more than we import. And we were a net exporter only briefly, and then only because our consumption fell when the former guy failed to keep the country safe during the pandemic. Less driving meant less oil needed to be imported, while our exports stayed relatively stable.
The reason prices continued to rise even as consumption fell was because the former guy pressured OPEC into a two-year deal to slow production to create a global oil shortage so US oil companies could post record profits despite the pandemic shutdowns. That deal caused the average US price per gallon to more than double before it expired. And since it expired, we’ve seen a record drop in gas prices.
Jeff Kramer
Management at Semiconductors (1984–present)Author has 11K answers and 8.5M answer viewsJul 26
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Why does the US export oil to other countries?
Because the country doesn’t own the oil, the companies that drill for it and bring it out of the ground own it. That’s why we issue oil leases to companies. They assume all the risk, but then they also have ownership of what they can “harvest” Once the oil is out then it belongs to the oil companies who decide who to sell it to and at what price. The President or the Administration control none of that.
Loring Chien
learned about the oil industry at age 10Author has 55.1K answers and 130.1M answer views3y
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Why does the US import oil given that it is one of the major producers globally?
the figures thrown around are confusing - but its apparent we import some oil if we don’t produce as much as we use. This is one reason for importation.
The other reason is that we do export oil rather than refine every barrel we produce.
The reason for this is that its not always economical to refine domestically produced oil. Many refiners are set to use a certain grade of oil… Nigerian oil, North Sea oil, West Texas Intermeidate, Saudi oil are all somewhat different in viscosity and content and sulphur, so some refineries are optimized for certain grades of oil.
Also transportation is an issue in the net costs. Sometimes is cheaper to put US west coast oil on a west coast tanker and sail it to another country in Asia and replace it with oil shipped from say Venezuela to the Texas gulf coast. Pipeline or lack of them play into this economic.
Combine transportation issues and desired oil characteristics and you get some strange trading going on.
Similar questions
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Former Business Analyst at Oil and Gas Industry (1970–2007)Author has 6.9K answers and 81M answer viewsJul 28
www.quora.com/What-percentage-of-US-oil-is-exported
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How can the US be an exporter and an importer of oil at the same time?
They are just trying to balance the North American refinery industry. Canadian oil sands are too heavy for most US refineries, while American shale oil is too light. So they blend the oil to get Goldilocks oil - just right. Also, the pipelines don’t run all the way across the continent, so the countries trade oil and products back and forth across the border by ship, rail, or truck.
California is totally screwed because it has no pipeline connections to the rest of the US. Neither are there any pipelines connecting Alberta to Canada’s East Coast. However, there are pipelines connecting the Alberta oilsands to the Texas oil refineries. Alberta producers are backing OPEC oil out of the Texas market by the simple expedient of cutting prices to make sales. Texas refineries are turning it into gasoline and particularly diesel fuel and selling it in Europe and Asia.
The Texas oil refineries prefer to run heavy Alberta oil because it is cheap and very similar to Venezuelan oil, which is no longer available because of sanctions. Texas producers send their lighter shale oil to the Irving refinery in New Brunswick, which happens to have the largest oil refinery in Canada, which is way too big for the Canadian East Coast Market, so it sells its products, particularly heating oil and diesel, to the NE US states. For that matter, it ships products around the US through the Panama Canal to California because… look at the price in California.
At some points in the past, Alberta producers have shipped their oil West through Vancouver, down the US West Coast, through the Panama Canal, and back up the US East Coast to New Brunswick. You have to be pretty desperate to do that, but sometimes they were. It would be a lot more efficient to just pipeline it across Canada from Alberta to New Brunswick, but Quebec has blocked that route because it doesn’t want to do anything to aid other provinces
K Vopalecky
First, petroleum companies doing business in the US import and export crude oil and refined derivatives -- not the US government.
Profits from these exports benefit the companies -- not the US, except for federal taxes.
Greg Freemyer
Science and engineering enthusiast, math guy, LNG, Nat GasAuthor has 3.1K answers and 4.9M answer viewsJun 21
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Does the US import or export more oil?
The US produces about 12 million barrels per day of crude oil, but it has refinery capacity for about 18 million barrels per day.
To keep the refineries highly utilized it has to have net crude oil imports around 6 million barrels per day.
But, US consumers only use about 12–13 million barrels per day of petroleum products (gasoline, diesel, jet fuel, propane, and butane).
Thus recently we have exported back to the world about 6 million barrels per day of petroleum products.
Thus, every year we are a net crude oil importer. And some years we are a net petroleum exporter.
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Brian Rauchfuss
Study history and the marketsAuthor has 3K answers and 608.4K answer viewsMay 6
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Why does the US export so much oil?
One reason is the Jones Act. The US has a lot of oil products available in ports in the Gulf of Mexico. The US needs them on the east coast. So obviously we should ship it in oil tankers from one to the other, right?
Unfortunately, the Jones Act from 1920 says that if you want to ship anything between US ports you need to do it with US owned, US registered, US crewed and US built ships. Oil tankers like that don’t exist, so our only choice is to export oil from the Gulf of Mexico to foreign nations and import oil from foreign nations to the east and west coasts.
There are other reasons. US oil refineries has a preferred mix of heavy/light oil, and the fracked oil produced by the US is the wrong weight. Selling fracked oil overseas and importing Middle East oil gets the mix to what they want.
Isn’t it a sign of US strength that we can refine roughly 18 million barrels per day of crude oil and much of what we refine is discounted low quality oil that we import from other countries.
That means the high quality, full price, oil produced in the US is mostly reserved for export.
If you explain in a comment why the amount of high quality US crude oil is being exported matters to you, I’ll take the time to look it up for you.
I couldn’t help myself, I looked it up.
1.08 billion barrels of US crude was exported in 2021, or about 25% of US production.
Peter Greenwood
Author has 2.5K answers and 1.1M answer viewsAug 30
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Why does the U.S. need to export oil?
The US doesn’t need to export oil. It is owned by private companies and, depending upon existing contracts, they sell their surplus on ‘the market’. ‘The market’ is a world market any anyone can bid for and win US produced oil with the highest price.
Demand is fairly inelastic, so variations in the supply e.g. Russia being cut out of the market make price variations very volatile in times of shortages. The same applies to other staple products like wheat.
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Rick O’Malley
42 years of oil & gas operations & managementAuthor has 3.6K answers and 2.7M answer views4y
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For how long is the US expected to remain an exporter of oil?
The U.S. may be an exporter of oil, but more significantly, it is still a net importer.
We produce about 10 million bpd and consume something like 18. Canada is the biggest source of imports.
From the 1970's until recently, exporting crude oil was illegal, except for some quantities that were exported from Alaska to Japan.
Through that time we were an exporter of refined products.
All that crude oil exports mean is greater flexibility for refiners to manage inventories and refine product in the place where it makes the most sense.
Those kind of inventory management decisions are way too complicated and nuanced to leave to Congress or federal regulators.
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Adam Roach
Author has 4.4K answers and 8M answer views3y
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Should the US government end oil exporting now?
There are some who suggest this but ultimately it’s not exactly an ideal scenario for anyone involved.
The cost of oil, globally, is an aggregate. It’s determined by the average cost of extraction, refinement and transport to the end user. Saudi Arabia has the cheapest oil to extract. Arabian oil is shallow and relatively clean. Libyan oil is clean but deeper down. Then there is Venezuela, which has very dirty oil, deep deep down but boat loads of it. Venezuelan oil is expensive to extract and process.
The US has ample reserves of varying quality but most of the “easy” oil has been extracted. Generally speaking that means our oil is slightly more expensive than the average which benefits from cheap Persian Gulf prices.
Now lets be serious here. Most oil in the US is not sitting on public land. It’s out at sea and sitting at the bottom of shallow small yield pumps. Oil companies are in the business of making money not securing US energy interests. Not exporting oil is bad for business. It also has the potential to disrupt global energy markets. That’s bad for everyone.
Not exporting oil is synonymous with not importing oil. That’s functionally what will happen because the US is still a major oil producer. We yank our crude off global markets the absence will be made up by foreign producers covering our gaps.
This would actually help Venezuela quite a bit. Maduro is in trouble because oil supplies are so cheap his oil is too expensive to process and ship profitably. It would also help Russia who has lots of oil but its costly to extract and move.
Whats the real benefit to the US?
The threat of dwindling reserves is real but Venezuela actually has enough oil to run the planet for 25 years, albeit at a premium price.
The US actually drives global energy policy. While we are no longer the primary consumer we are still a major consumer. The loss of primary however means that there is plenty of money to be made supplying China who is the biggest consumer now.
If and when we run out of dinosaur juice, what happens?
The obvious answer is global economic calamity but realistically it’s not going to be a full scale collapse. Many countries have been actively pursuing energy independence for 25 years and quite a few have pulled it off. Brazil makes enormous use of sugar cane ethanol, Germany has moved heavily into renewable, some went nuclear while others have eschewed nuclear for more exotic but less toxic alternatives like tidal and solar.
The US is pretty good at engineering itself out of a corner. When the black gold gets scarce its a safe bet that nuclear fusion will magically be operational pretty soon after that. Conspiracy theorists think it works now but big oil keeps it shut down.
There are 12 locations working on antimatter, that we know of, and that’s a fuel with serious potential and there is even more exotic energy forms on the theoretical drawing boards. Something will replace oil just like anaerobic oil replaced whale oil.
Hell there a whole internet subculture of conspiracy theorists that think dinosaur juice is actually a self replenishing resource and the whole oil supply structure is a scam. If that is actually true, admittedly a stretch, then hoarding our oil would be incredibly stupid.
The truth is that we consume more than we probably should. Reining in our consumption would be far better for the US in the long run than hoarding and not focusing on efficiency.
We put oil into everything, plastics, pharmaceuticals, chemicals, textiles…..it’s actually kind of ridiculous. That over reliance on a finite resource is dumb. If America is to survive the collapse of the oil based economy it won’t be through hoarding to be the last country with reserves, rather it will be by being one of the first countries to transition into the next big thing.
If energy resource control continues to be the driving geo political mechanism having the last oil reserves will be irrelevant if we don’t have the next big thing. We are already somewhat behind highly technical countries with limited fossil fuel assets now. Japan, France and Germany are on the forefront of exotic energy research and China is catching up as fast as they can.
This question actually illustrates a central problem with how Americans view energy policy in general. We tend to imagine that we will always have access and control over the dominant energy platforms of the day. That we can hoard our way into eventual dominance in a time of crisis. That’s just not realistic and we have plenty of evidence to show how true that is. When a refinery goes down, we get chaos. When a pipeline is compromised it causes massive disruptions. These are just minor bugs usually. When a hurricane like Katrina wipes out a whole depot it takes two weeks to adjust and that’s bad for business.
Fossil Fuels still have their place but it’s an aging technology in a time of rapid advancement. One where global R&D now far outstrips even the mighty US economy when everyone else is taken together.
Our over reliance on oil is actually our Achilles Heel. If we ever get to a point where oil hoarding is a serious policy objective, we will already be in serious trouble if that’s all we have. It’s not likely that the rest of the world will have boxed themselves in quite so badly because they’ve all learned to be economically adroit over the last 40 years while we tend to be too conservative with some things. Americans don’t seem to like change where many foreign states simply accept it as a feature of life.
Peter Murton
Private Oil Analyst/TraderAuthor has 2.1K answers and 1.3M answer viewsUpdated Jan 1
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Why does the US export and import crude oil at the same time?
Others have touched on most or all of the reasons, but I’ll summarize:
Proximity/ease of transportation. Not all imports are shipped all the way from Saudi Arabia. Canada is the largest exporter to the US by far, and some Americans can see Canada ‘from their porch’. It can be a whole lot cheaper to import oil from the Canadian prairies a few miles across the world’s longest undefended border to the US, than to ship it over the Rocky Mountains for example. Similarly it can be easier for the US coasts to get oil shipped in from overseas than to transport it very long distances by land. Big ships can move things remarkably cheaply these days.
Available grades. There is a major disconnect between the grades the US produces (especially the ultra-light distillates that are the main product of the US ‘fracking/shale’ revolution) and what US refineries are set up to process. There’s some debate about why this is. Shale oil is generally considered inferior quality, because it isn’t as flexible as heavier grades in terms of what can be produced from it. Grades are often mixed together, for example light shale oil might be blended with very heavy Canadian tar sands bitumen to come up with an intermediate-weight oil for convenient refining. (The heavy stuff is mostly found in Canada and Venezuela, so it is imported.)
Nationalism. A lot of US refineries are owned by the Saudis, who may have an incentive to continue buying oil from the home country.
Capitalism. Oil importers and exporters don’t make business decisions based on what is best for the country. If they can buy crude from Texas for $50 or Saudia Arabia for $40 (after shipping), and can sell crude in Texas for a $10 profit or in India for a $15 profit, they will import and export oil instead of just using American oil in the USA as would seem logical. It may seem obvious to you and me that it’s incredibly wasteful for crude tankers to be passing each other in the Gulf of Mexico importing and exporting the same thing, but if a capitalist can figure out a way to make profit on sailing a ship-full in circles for a year that is exactly what they will do!
David Moe
Former Business Analyst at Oil and Gas Industry (1970–2007)Author has 6.9K answers and 81M answer views3y
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How long can the US sustain its status as a net oil exporter since it has finite oil?
The United States hasn’t been a net oil exporter until very recently. Until this year it was a heavy net oil importer. However, its oil production has skyrocketed in recent years due to new techniques in hydraulic fracturing, and most of the oil produced in the US is now from fracked wells.
Note that this drop in imports has occurred during the last few months, and is primarily due to the US ban on imports of heavy oil from Venezuela, which used to be a major exporter of oil to the US. Fortunately this is easily replaced by similar quality heavy oil from Canada.
See: US Energy Information Administration Petroleum & Other Liquids
The problem with fracking is that the decline rate on these fracked wells is like a rocket in reverse. They can decline 70% in production in a year. The oil companies have to drill more and more wells every year just to maintain production. If they stop drilling new wells, US production will fall like a rock. I call this the “Red Queen Effect” from Lewis Carol’s “Through the Looking Glass”. See: The Red Queen Effect: Avoid Running Faster and Faster Only to Stay in the Same Place
‘Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!’
In addition, they are producing the source formations for the already exhausted reservoir formations in Texas and elsewhere. These formations have been known for up to a century, but there was no way to produce the oil from them until modern techniques in horizontal drilling and multistage horizontal hydraulic fracturing were introduced. The problem is that they are of finite size, like the producing formations they created above them, so they will also run out eventually.
Fortunately, Canada has enormous oil reserves of the same quality as Venezuela, so assuming that the necessary pipelines can be built despite environmental opposition, it can make up for declines in US production. Canada has the third biggest oil reserves in the world, much bigger than those of the US or Russia so it is no danger of running out of oil in this century, or even the next century.
US Net Oil Imports from Canada
There is a certain synergy in US and Canadian oil production, and the two countries export huge amounts of oil to each other, although Canadian net exports are much larger since the Canadian product market is much smaller.
Most American oil production from fracked wells is too light for most American refineries, while most Canadian oil is too heavy for them. If you blend the two, you get “Goldilocks” oil, which is just right.
Canada’s oil pipelines do not extend all the way across the country due to the opposition of environmental groups and certain provinces which are not interested in national unity (i.e. Quebec) so Eastern Canada imports large amounts of US oil, while the Midwestern US imports large amounts of Canadian oil because it is much cheaper than other oil. This results in cheaper fuel prices in the US than elsewhere on the planet.
For those people from California are wondering why their fuel prices are so much higher than all the other states, the North American pipeline grid does not extend into California, so it has to depend on more expensive imported oil from OPEC rather than cheap Texas oil and even cheaper Canadian oil.
Randy Weir
Author, journalist, ministerAuthor has 13.2K answers and 71.3M answer viewsSep 13
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If the United States is now a net exporter of oil and no longer imports it, why is the price of oil so high?
Our oil independence is irrelevant. Oil is a commodity so it’s price is determined by global supply and demand. Thinking American oil would be cheaper than foreign oil is like thinking that gold mined in the US is worth less than gold mined in Peru.
That said, we’ve never stopped importing oil. Our refineries can’t process the light crude we pump here, so we export it and import heavy crude that we can refine. Being a net exporter doesn’t mean we don’t import. It just means we export more than we import. And we were a net exporter only briefly, and then only because our consumption fell when the former guy failed to keep the country safe during the pandemic. Less driving meant less oil needed to be imported, while our exports stayed relatively stable.
The reason prices continued to rise even as consumption fell was because the former guy pressured OPEC into a two-year deal to slow production to create a global oil shortage so US oil companies could post record profits despite the pandemic shutdowns. That deal caused the average US price per gallon to more than double before it expired. And since it expired, we’ve seen a record drop in gas prices.
Jeff Kramer
Management at Semiconductors (1984–present)Author has 11K answers and 8.5M answer viewsJul 26
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Why does the US export oil to other countries?
Because the country doesn’t own the oil, the companies that drill for it and bring it out of the ground own it. That’s why we issue oil leases to companies. They assume all the risk, but then they also have ownership of what they can “harvest” Once the oil is out then it belongs to the oil companies who decide who to sell it to and at what price. The President or the Administration control none of that.
Loring Chien
learned about the oil industry at age 10Author has 55.1K answers and 130.1M answer views3y
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Why does the US import oil given that it is one of the major producers globally?
the figures thrown around are confusing - but its apparent we import some oil if we don’t produce as much as we use. This is one reason for importation.
The other reason is that we do export oil rather than refine every barrel we produce.
The reason for this is that its not always economical to refine domestically produced oil. Many refiners are set to use a certain grade of oil… Nigerian oil, North Sea oil, West Texas Intermeidate, Saudi oil are all somewhat different in viscosity and content and sulphur, so some refineries are optimized for certain grades of oil.
Also transportation is an issue in the net costs. Sometimes is cheaper to put US west coast oil on a west coast tanker and sail it to another country in Asia and replace it with oil shipped from say Venezuela to the Texas gulf coast. Pipeline or lack of them play into this economic.
Combine transportation issues and desired oil characteristics and you get some strange trading going on.
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