I hope this is in the right forum, I’m thinking this will turn into a Great Debate. If I’m incorrect, please move topic and accept my apologies.
I heard on a radio news broadcast 2 weeks ago that for the first time this year that the United States exported more oil than it imported. This news was somewhat confusing to me and brought up some questions.
It seems that we rely pretty heavily on oil from the Middle East and other OPec nations and we seem to be at their mercy when it comes to gas prices. Unrest in the Middle East such as the recent Arab Spring had an affect on oil prices, especially when Libya was in turmoil.
Why do we not soley and totally rely upon the oil produced in the good ole United States to satisfy our needs? If we can produce an amount in excess of what we import, why are we not using it and breaking the dependance on OPEC?
And, wouldnt it be cheaper to use our own oils? No transatlatic or transpacific shipment needed…
We still import much more OIL than we export. We’re currently exporting GASOLINE (which we’re refining from the OIL we import). It’s not entirely because we don’t use it, but because gas prices are seeing temporary highs in various parts of the world.
That’s the reverse of Iran’s situation back in 2009. They didn’t have enough refining capacity back then, so they exported a bunch of oil but had to import much of their gasoline.
It’s profitable for the refining companies to produce gasoline and send it elsewhere. If it stayed here, GAS prices here (not necessarily OIL prices) would drop, which is not necessarily what they want.
Both importing and exporting the same commodity isn’t all that unusual for a country. Geography, for example, can have a big effect; if I’m dirlling for oil in the Pacific Northwest, it may be cheaper to export it to Canada for refining than across the US to gulf refineries. Conversely, oil extracted in Quebec may be imported to refineries in Maine instead of to refineries in Alberta.
Also, oil comes in many grades, and some of those grades don’t meet clean-air standards in the US. I suspect a significant part of US exported oil is lower grade.
It’s also worth noting that the US is a free economy. There isn’t a supreme dictator who can claim American produced gas for Americans, regardless of whether the company which made it can find a better price elsewhere.
In fact, the single biggest provider of oil to the USA is Canada, which isn’t a member of OPEC.
The straightforward answer to your question, however, is that for the most part it’s simply not relevant where the USA buys its oil from. Oil is essentially fungible, meaning that one drop of refinable oil is the same as the next. Transportation costs do factor into it but they’re very, very small; transporting bulk items around the world is a tiny fraction of the cost of any good.
If the USA were to go out of its way to import oil from Canada, Norway, or other non-OPEC sources in lieu of OPEC sources there would be, after a quick adjustment period, no real change to anything. Canada, Norway et al. would have to sell less oil to other countries because the USA would be sucking up all their oil. They would offer no price reduction, of course - why would they want less money for their oil? They’re quite happy to sell at the top market price. The countries to whom they were selling less oil would simply have to buy their oil from OPEC. You’re shuffling around drops of oil, **but you’re not changing who’s buying it or who’s selling it. **
But it hasn’t been true for decades. We’ve been a net importer since at least the 70s. We’d rather be in the position to be less reliant on OPEC nations keeping their production up, to be honest.
But the premise of the OP is false and trying to break the dependence on OPEC nations for oil supplies depends on the OP being closer to true.
Okay, it isn’t that I don’t believe you, it’s that that would be a really interesting fact. Do you have a cite for it? This site, which is admittedly not the best, claims the US’s trade deficit in 2010 was $497.9 billion, and oil imports were $252 billion. Are you using definitions other than the type I linked to?
Agreed. I was just nitpicking a factual error in the OP that hadn’t been mentioned.
But I think it was an indicator of a larger point. The radio show that the OP heard was apparently trying to convey the message that American oil production is better than it has ever been - claiming that not only are we net-exporting oil but doing so for the first time in history. This is emblematic of the “there’s no problem that can’t be solved by progress” school of thought.
But even if it were true, so what? If other countries were to eliminate their imports of American airplanes and aircraft engines the USA would have a big fat trade deficit again. You export some stuff and you import other stuff.
Because I’d much rather America import airplanes from Toulouse or Frankfurt than oil from Saudi. If we can eliminate our dependence on oil, we can stop the ridiculous, massive wealth transfer from the developed world into the Middle East.
Exactly. Crude oil is a commodity that is put up for sale to the highest bidder. Unless you [OP] are an advocate of Nationalizing our crude, there will be no energy independence.
See, I think this is ass-backwards. It’s much better to export high-margin technology than commodities. What happens when the oil runs out or there’s a solar-power breakthrough? The Saudis are fucked, but the US keeps churning out airplanes.
It’s always better, I think, to be a net exporter of more advanced products and an importer of raw materials.
The OP seems to be assuming an economic or industrial policy that doesn’t exist. The government does not export or import oil; companies do – profit-seeking companies. Like all economic actors, they seek to minimize costs and maximize revenue. Refiners buy oil where it costs the least, and sell gasoline and other products where they can charge the most. Drillers drill where it costs the least, and sell the oil to the highest bidder. In the US, the lines intersect at a price and amount of oil that means that a certain amount will be imported, but at a price and amount of gasoline that involves net export.
The US government, hypothetically, might close our borders and force refineries to make do with the oil we can produce; the price would go up, demand might go down, many refineries would go out of business, and we’d never be able to export gasoline at that price even if we didn’t use it all, because without the US as a market, the international demand for oil would fall, sending gasoline prices into the basement.
Now, the US demand for oil isn’t that flexible, and we’d have some big adjustments to our economy if we even decreased imports. But we do not have a policy that dictates any of that, or even a government with the authority to make one. The most they could do is use taxes, tariffs, and other legislative tools to distort the market in a direction of their liking – and they do. But it’s not much.
For those that want to look at the numbers, BP has published an annual statistical review of proven reserves, imports, exports, etc. by nation in an easy to use Excel workbook:
The United States doesn’t import very much oil from the Middle East. Due to geography, Middle Eastern oil is mostly sold to Europe and Asia. The United States imports most of its oil from Canada, Mexico, and Venezuela.