The Myth that the US will Soon Become an Oil Exporter
Countries trade crude oil and oil products back and forth. When all of these transactions are netted out, is the US close to becoming a “net” oil exporter?
With the recent increase in oil production (perhaps even exceeding that of Russia on a “barrels-per-day” basis), a person might think that US oil production problems are behind us. If we look at the data, though, it is very clear that the US is still a long way from becoming a net oil exporter.
There are several reasons for confusion. One is the fact that excess refinery capacity is quite different from being an oil exporter. Another is that tight oil (extracted through “fracking”) is growing from a small base, but can’t necessarily ramp up very far, very quickly. Another source of confusion is with respect to how different types of liquids should be combined for comparison purposes.
In this post, I would like to explain why the idea that the US is about to become a net oil exporter is simply a myth.
1. On what basis does the US Energy Information Administration (EIA) make forecasts of oil and other energy supplies?
When the EIA makes forecasts of oil and other supplies, as in its recently issued Annual Energy Outlook, Early Release 2012, it looks at future consumption and future supplies in terms of the amount of energy supplied in Btus. In doing this calculation, oil is combined with natural gas liquids. Biofuels (which in the case of the US are almost entirely corn ethanol) are treated separately, as part of “renewables”.
It seems to me that the EIA’s approach is about the only reasonable way of making comparisons, since it is energy value, and not volume (barrels-of-oil per day), that is important. Furthermore, if we are talking about oil imports and exports, we want to know about oil, perhaps including natural gas liquids (which are sort of like oil) by itself. Biofuels are a separate issue.
2. Where are we now, relative to being an oil exporter?
On a Btu basis, the US imported 58% of the oil it consumed in 2011. This percentage is down from a high of 67% in 2005 and 2006, but it is still very high.
Figure 1. US oil imports as a percentage of the oil consumed in the US - calculated using EIA Btu amounts for oil and natural gas liquids.
If the US wants to become an oil exporter, it must first get its imports down from 58% to 0%, and then ramp up production by enough to have oil to export as well.
3. What does the US Energy Information Administration (EIA) forecast regarding oil imports/exports?
In EIA’s Annual Energy Outlook 2012 Early Release, EIA gives the following forecast to 2035. (2010 and prior data are actual amounts.)
Figure 2. Comparison of forecast oil production (AEO Figure 12) and forecast oil consumption (AEO Figure 8), based on EIA's AEO 2012 Early Release.
We can use the forecast in Figure 2 to create a graph similar to Figure 1, but with the EIA’s forecast included. Such a graph is shown as Figure 3 below.
Figure 3. AEO 2012 Forecast of Percentage of Oil Btus Imported
This graph indicates that while percentage of oil imported will drop a little (from 58% down to about 50% or 51%), the United States will not become an oil exporter before 2035.
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