Wednesday, November 30, 2011

Hurray we are saved, the USA is a net fuel exporter

It’s time for a little break from the drudgery of spreadsheets.

I can't resist on commenting on this misleading story in the WSJ, titled: "U.S. NEARS MILESTONE: NET FUEL EXPORTER"

The article is behind a pay wall, so I only have what was quoted in today's (11/30/2011) edition of ASPO-USA's Peak Oil News, but that was enough:

U.S. exports of gasoline, diesel and other oil-based fuels are soaring, putting the nation on track to be a net exporter of petroleum products in 2011 for the first time in 62 years.
A combination of booming demand from emerging markets and faltering domestic activity means the U.S. is exporting more fuel than it imports, upending the historical norm.

According to data released by the U.S. Energy Information Administration on Tuesday, the U.S. sent abroad 753.4 million barrels of everything from gasoline to jet fuel in the first nine months of this year, while it imported 689.4 million barrels.

That the U.S. is shipping out more fuel than it brings in is significant because the nation has for decades been a voracious energy consumer. It took in huge quantities of not only crude oil from the Middle East but also refined fuels from Europe, Latin America and elsewhere to help run its factories and cars.

I will also note that the story is similar to this one in May 2011:

In February, the U.S. exported 54,000 more barrels of petroleum products each day than it purchased abroad, with diesel and finished petrol leading the increase. According to the American Petroleum Institute, an industry group, U.S. refined product exports rose in the first quarter of 2011 to 2.49 million barrels per day, a 24.4 percent year-over-year increase, the Financial Times reports.

In the first quarter of 2011, imports dropped to 2.26 million barrels a day, a 14.4 percent year-over-year decline, according to the FT.

This might seem like realy good news: the first time since 1949, or 1991 depending on which story you believe, the USA is a net exporter!! WOW, all those peak oilers were so full of it; its time to go out and buy that new SUV!

Many of the comments at the WSJ site agreed with this view point.

Some of the comments had a different take:  they complained that this just meant that American were consuming so much less fuel than in previous years, and, that's why there are now net fuel exports.

Only a very few comments recognized how misleading the article was.

The WSJ article does note, correctly, that its been 62 years, 1949, since the USA was a net exporter—of unrefined "crude oil" See e.g., Figure 11 of  Trends in USA Petroleum Production and Consumption, reproduced below:

As you can see from this figure, there is just no way that the USA could be a net crude oil exporter in 2011 without there being a total collapse in consumption while still maintaining production. 

However, rather than talking about crude oil, the article appears to be presenting data on barrels of refined oil products, such as, "gasoline to jet fuel." 

The quoted exports of refined oil products of 753.5 million barrels over 9 months (about 270 days) works out to be about 2.8 million barrels per day (mbd).  The quoted imports of refined oil products of 689.4 million barrels over 9 months equals about 2.6 mbd. 

So we are talking about a net difference of only about 0.2 mbd?  How important is this to the USA? 

And, does this now mean that after 61 years, the USA is now free of foreign oil imports?  

My Answers: Not very important, and no, it does not.

To gain some perspective on these numbers, let’s take a look at this portion of Figure 5.1b from the EIA's Annual Energy Review 2010, , publically released on October 19, 2011.  

Now we are getting a better picture of what the USA’s petroleum flows are:  in 2010 the USA was importing about 9 mbd of crude oil plus about 2.6 mbd of refined oil products.  And in exchange, the USA's exports of refined oil products was about 2.3 mbd (the USA currently exports negligibly small amounts of crude oil).

The big news is that for the first nine month of 2011 refined oil products exports are up slightly and refined oil products imports are down slightly, thereby causing a crossover.  It looks like the last time this happened was in 1957, 54 years ago. 

Here’s yet another perspective, from Figure 5.0 of the EIA's Annual Energy Review 2010.

That thin sliver at the top right of the figure is what these stories are talking about.

But, according to this figure in 2010, the USA imported 9.16 mbd of crude oil and exported 2.17 mbd of refined oil products.   Moreover, domestic consumption of refined oil products was 19.15 mbd.

Not much will have changed in 2011.

So, the 0.2 mbd net difference implied by the WSJ figures is only about one percent of the USA’s refined products consumption in 2010.  Excuse me if I don't do back flips over one percent.

Despite the rhetoric of the story, the USA is still a strong net importer of crude oil.  With 5.51 mbd of domestic crude production, and 9.17 of crude oil imports, 62 percent (9.17/(5.51+9.17))
of the USA crude is imported. 

This is not likely to change any time soon.


  1. So where are the "drill, baby, drill" morons like Palin and Gingrich demanding to know WHY we are exporting ANY fuel products when gas is still well over $3 a gallon? You think at least ONE moron WSJ commenter would have caught on to THAT obvious (if it were true) contradiction. Alas.

  2. It seems paradoxical for a country like the USA to be both net importing crude oil and also exporting petroleum products; indeed, why not just import that much less and use all that is imported domestically?

    The answer lays, in part, on just doing the neighborly, and geopolitically smart, thing to do, and, for money. That is, selling the refined oil products abroad for more money than could be made in the USA.

    I believe that most of the Refined Oil Product Imports to the USA is gasoline coming from the EU (because the EU predominantly uses diesel, but still has to produce significant amounts of gasoline as part of their refining process).

    A good portion of the Refined Oil Products Exports from the USA is gasoline going to Eastern Canada (because there is no cost-effective means of transporting western Canadian oil to oil-poor Eastern Canada), and, to Mexico because Mexico doesn’t have sufficient refining capacity to meet its own needs. Other countries receiving US Refined Oil Products Exports include several countries in Central and South America, like Brazil, Chile, Panama, and, some more far flung places like Japan, Singapore, Turkey and The Netherlands. But then, even China and Venezuela gets some refined oil products from the US—go figure! (see e.g.,

    It makes sense for the USA to meet the needs of the local regions for geopolitical reasons—the USA doesn’t want a bunch of gasoline-starved Mexicans and Frenchmen living next door, who are mad because they don’t have enough liquid transport fuels to function.

    When Mexico becomes an ex-net crude oil exporter (soon I expect), then Mexico will become even more dependent on refined products from the USA and the demand will increase even more.

    Likewise, when Eastern Canada starts having problems importing oil from declining North Sea producers like Norway and the UK, or from troubled areas in North Africa (so far Canada’s main source, Algeria, as been fairly stable), then Eastern Canada will likely have to turn to the USA for the needed Refined Oil Products.

    It’s when the pool of exportable oil starts declining, that countries will find out who their friends are, or, not.

  3. Current export regulations prohibit the export of domestically produced crude oil under the terms of the Energy Policy and Conservation Act (42 USC 6212) and other federal laws, however you can export refined products. When WTI is cheaper than Brent the US can sell refined products at world market prices made from cheaper-than-Brent crude oil and pocket the difference.

  4. Hey BSL, thanks for bringing up 42 USC §6212 (“6212”). This raises some interesting conflict-of-law situations that surely will be litigated in the future.

    First, the USA presently does export crude oil, but only about 42,000 barrel per day in 2010, all of it to Canada (see, and, it has exported much larger amounts of crude in the past (see e.g.,

    It appears that 6212 give the president discretional authority (note the “MAYs”) to control exports for the “national interest”:

    (a) Export restrictions
    The President MAY, by rule, under such terms and conditions as he
    determines to be appropriate and necessary to carry out the
    purposes of this chapter, restrict exports of -
    (1) coal, petroleum products, natural gas, or petrochemical
    feedstocks, and
    (2) supplies of materials or equipment which he determines to
    be necessary (A) to maintain or further exploration, production,
    refining, or transportation of energy supplies, or (B) for the
    construction or maintenance of energy facilities within the
    United States.

    (b) Exemptions
    (1) The President shall exercise the authority provided for in
    subsection (a) of this section to promulgate a rule prohibiting the
    export of crude oil and natural gas produced in the United States,
    except that the President MAY, pursuant to paragraph (2), exempt
    from such prohibition such crude oil or natural gas exports which
    he determines to be consistent with the national interest and the
    purposes of this chapter.
    (see e.g.,

    Notice that “petroleum products” and “petrochemical feedstocks” in (a)(1) would definitely include refined oil products, so these could be restricted also, in theory.

    However, section (d)(3) provides a specific exception for Canada and Mexico:
    (d) Restrictions and national interest
    Any finding by the President pursuant to subsection (a) or (b) of
    this section and any action taken by the Secretary of Commerce
    pursuant thereto shall take into account the national interest as
    related to the need to leave uninterrupted or unimpaired -
    (3) the historical trading relations of the United States with
    Canada and Mexico.

    Additionally, in conflict with 6212, the USA has multiple free trade agreements (FTA), such as NAFTA 605(b) which I wrote about here:

    These agreements basically limit one signing party (e.g., the USA and Canada for NAFTA; Mexico refused to sign) to restrict exports to another signing party.

    So what happens when there is an attempt to invoke 6212(a) that would conflict with a FTA?

    No doubt a law suit will ensue.

    Here’s a nice example of the complexities of the laws involved (caution, big file):

    Cheniere Energy is applying to the DOE for a license to export LNG from its facility in Louisiana, and, the above documents review the laws obligating the government to not restrict exports, and how such a restriction could be brought before an international body for dispute resolution. This document also provides a comprehensive review of US Natural Gas resources and production capacity which is pretty interesting (exhibit D).

    Despite all the excitement about exporting refined products, the USA will likely remain a net petroleum importer for the foreseeable future, unless the was a collapse in consumption (but then there would be no capital investment to continue production at its present rate) or a dramatic increase in production (e.g., a 3x increase), which I just don’t see happening.

  5. Most fuels we are talking fossil fuels that have taken millions of year to form from the dead plants and animals under the pressure exerted deep inside the earth. So this blog is very useful to all to save our country thank you for posting.
    Save fuel, Save Water, Save Electricity, Save Environment, Saving fuel, Fuel, Water, Electricity, Environment.


Your comments, questions and suggestions are welcome! However, comments with cursing or ad hominem attacks will be removed.