“The United States remained a net crude oil importer in 2020, importing nearly 5.88 MMb/d and exporting about 3.18 MMb/d.” (Source)
Why do we import and export the same thing? Why don’t we just import 2.7 MMb/d and export 0?
Oil is mostly fungible but not entirely. And there are other costs involved, like transport.
Transporting oil from California to New England may make less sense than importing oil to New England from Europe, for example.
The mix of chemicals in crude (sweet vs sour) and the viscosity will also be different depending on where it is sourced and will cost a different amount. And the cost to refine and what you want to refine can vary. It may make economic sense to export WTI (sweet) and import more sour crude to the refineries along the Gulf Coast.
We hear “price of oil” but that’s usually (but not always) the price of WTI (West Texas Intermediate) or sometimes Brent (North Sea). The cost of a barrel can vary a fair amount. For example, back in January, WTI was just over $80 and while WCS (West Canada Select) was in the mid $60s USD. Even within the same country, the price can vary a fair amount. Today, WTI closed over $100 but Louisiana light closed under $100. So, that can affect how much gets imported/exported.
Factor in the differences in the quality of crude, transportation cost, the varying cost depending on source, and other differences, plus the vast size of the US itself, and sometimes it makes sense to export oil and import oil at the same time.
What does sweet or sour mean when talking about crude oil?
different amount of sulfur compound: sweet as less than 0,5% and sour as more.
I figured it was probably something not evident to the naive eye and not just capriciousness. Although I was going to guess it had more to do with relationship-building than just costs.
My company (a federal IT contractor) often would subcontract our people to a partner company while at the same time hiring some of their people as subcontractors. Subcontractors are also not fungible. But we did this more as a way to build a relationship with the other company, and allow both companies to expand their skill sets and team together for more work than we would get separately.
Thanks for the great explanation.
The US has a disproportionate number of refineries that are set up to handle high-sulfur crude. We import the crude, refine it, and (in some cases) export the finished product.
Which along with the “heaviness” of the crude (i.e. the proportion of high and low molecular weight hydrocarbons), has a LOT to do with how and where it can be refined.
List of crude oil products - Wikipedia
So it’s possible that someone’s refinery elsewhere is set up to refine some sort of light, sweet crude and the best price is actually FROM the US, so we export it. Meanwhile some US refineries may be set up to refine the heavier stuff from Canada, so we import it. Refineries can’t turn on a dime to refine different sorts of crude oil.
Very timely OP. Here’s an article from the Atlantic on why swapping out oil 1-1 is not all that simple:
Even if all oil were the same, national borders are artificial lines, and have nothing to do with how easy it is to transport materials. Imagine, if you will, that there were two major refineries in North America, one in Vancouver and one in Buffalo. Would you expect Seattle to get its oil from Buffalo? Of course not: Vancouver would be much closer. And likewise, Toronto wouldn’t get their oil from Vancouver; they’d get it from Buffalo. So the US would be exporting oil from Buffalo to Toronto, and at the same time importing it from Vancouver to Seattle.
Now toss in that transport of nonperishable goods by sea is extremely cheap, which means that any place near the ocean can easily get oil from any other place near the ocean, anywhere in the world. In fact, it might be cheaper to get it by ship than from even a relatively nearby source over land.
Also, a common complaint from Alberta is that the capacity to move crude oil from there to market is limited. One item often discussed is that the $20/bbl price difference for their oil is a reflection of the lack of transport options and the high cost of additional transport.
The environmental disputes over pipelines are part of this calculation. The Keystone XL pipeline, paused by Obama, approved by Trump, cancelled by Biden, would have carried more oil to the gulf coast for processing. When the delays became too much and private industry pulled out, Justin Trudeau’s Liberal government spent billions to take over and are completing a pipeline (paralleling an existing line) to Vancouver, from where oil can be shipped to Asia. (Maybe it will eventually be shipped to California too, where a tanker spill will be far less environmentally disastrous than a leaking pipeline.) Meanwhile, the federal Conservative party and the Alberta (Conservative) government complain the Liberals have done nothing for the Alberta oil industry. Ah, politics.
Meanwhile, excess crude capacity travels by rail in Canada, which is less environmentally risky unless it blows up a town and kills several dozen people. ( Lac-Mégantic rail disaster - Wikipedia ) Apparently the volume of oil shipped by rail has jumped dramatically in the last few years.
To be fair, and to also illustrate the finer details of issues discussed in this thread, the oil in the Lac Megantic disaster was actually being shipped from North Dakota. It was a product of fracking and allegedly contained additional, more volatile chemicals as a result of the fracking.
Also we need to note that sulphur in oil when burned contributes to acid rain, which is one reason why “sweet” is preferred.
One question I have is how much Oil and Gas will the world need once the power stations to be dominated by renewable generation and transport migrates to a battery electric powertrain and heating becomes electric.
These processes are underway and, so the demand for Oil and Gas will go down. We will, of course, need it as the feed stock for many industrial processes that require chemicals. But how low will demand fall to? How much Oil and Gas is used for its energy content alone? How much is needed because we need the chemicals to make plastics and other materials.
The demand for Oil and Gas will eventually shrink…down to what? Some small percentage of current demand?
I’ve had this discussion on other threads. Here in Canada, most newish buildings are heated with natural gas. A small number are all-electric. Older ones use heating oil.
The amount of electricity required to heat most buildings, replacing natural gas, would mean almost an order of magnitude increase in the electrical supply and grid, and this is after two or three decades of building high-efficiency insulated houses. Add to that the level of capital equipment investment required, and the idea looks less and less likely in the time frame. It’s like suggesting all gas vehicles might be replaced by electric in a decade or two… highly unlikely. And for general power use- unless someone comes up with much better batteries, I don’t see that a significant amount of the grid supply will come from batteries fed by variable renewables. Rather, we will have to bite the bullet environmentally and build more nuclear and allow more dams.
1 cubic meter of natural gas is roughly 40kWh.
I used 560m^3 of natural gas to heat my house in January. That’s 22,400kWh.
My electricity bill for the same period was 1379kWh. Everything except the furnace (and the patio barbeque I didn’t use that month) is electric - hot water, stove, dishwasher, air conditioner, dryer, Tesla charger, etc. This is for a 1800sf bungalow with walk-out basement, recent build, triple pane windows and 6" stud walls for insulation.
Try to imagine if the household demand for electricity went up 15 times current value. We’d better get working on that fusion power plant development. Not to mention industrial uses.
The one benefit of natural gas over oil or coal is that it is burning hydrogen as well as it is burning carbon.
Is that 15 times based on resistive electric heat or a heat pump? I suspect the former, because the latter is much more efficient. And please don’t tell me heat pumps don’t work in Canadian winters. Ground-source ones work just fine pretty much anywhere in any climate.
Oil is made up of hydrocarbons, so burning that is also burning hydrogen.
Oil is long chains, one carbon about 2 hydrogens. coal is just carbon. Methane is 4 hydrogens for each carbon. Since hydrogen produces a bit more energy when burning, and there’s more of it in methane, you get less carbon dioxide emissions for the same heat with natural gas. Perhaps in future we could substitute pure hydrogen, but that comes with peripheral risks.
Yes, heat pumps would reduce the demand compared to resistive heating - but that would require a lot of capital for installation. It’s a few thousand to replace a furnace. But to upgrade your electric service I have seen people mention quotes from $10,000 to “sorry, not available”. There’s also whatever is needed to create a heat source for the pump- ie. burying any heat source piping - another cost.
Under ideal conditions, a heat pump can transfer 300 percent more energy than it consumes. In contrast, a high-efficiency gas furnace is about 95 percent efficient. Heat pumps are powered by electricity, so you can save substantially on fuel consumption. It’s over 100 percent efficient in various temperate climates and can serve as both a heater and air conditioner.
300%? So instead of 15 times the electrical consumption I have now, I would only be using 5 times. Bonus! Also consider heat pumps are most efficient when the temperature differential is less. “Less of a temperature differential” between indoors and outdoors is not what Canada is known for.
Believe me, I would love to convert to zero emissions. But that is not about to happen for western society en masse unless something changes drastically - our lifestyle expectations, or battery tech, or power generation tech, or insulation… or a clever heat pump innovation.
That we can buy effective electric vehicles today is a step in the right direction.
Of course, Canada also isn’t typical, as human habitation goes. Lots of the world needs to spend little or nothing to keep homes warm, and even in the places that do need furnaces, most of them don’t need to consume as much energy as Canada does.
Yes, but those areas that don’t need a lot of heating, usually need a lot of cooling. The demand for air conditioning will grow over time. Fortunately AC demand tends to be concurrent with solar power.
Also, the areas that don’t need as much heating also don’t consume as much natural gas to heat their building today.
The point is, we could leave Canadian homes heated by natural gas, and still make a huge overall decrease in our fossil fuel usage by switching other energy demands to other sources.