U.S. oil exports at record high, but energy independence still elusive
The U.S. Energy Information Administration recently released preliminary data showing that, during the week of Nov. 30th, the U.S. exported more oil and oil products than it imported for the first time in decades.
Yes, but: The net exporter status lasted only one week, and doesn’t represent annual averages. While many celebrate the U.S.’ new status as a net oil exporter, the reality is that the U.S. will never be energy independent as long as it is tied into global markets.
Background: The export growth owes primarily to the “shale revolution,” the combination of technologies including hydraulic fracturing and horizontal drilling that has led U.S. oil production to more than double in the past 10 years.
• As a result, domestic thirst for foreign oil has waned, while companies have increasingly shipped U.S.–produced oil overseas.
• At the same time, refineries along the Gulf Coast and elsewhere are buying crude from domestic and foreign sources, then churning out products like gasoline and diesel to increasingly sell abroad.
Reality check: This doesn’t mean the U.S. has gained control of the global oil market.
• In recent weeks, President Trump has taken to Twitter to encourage OPEC and Saudi Arabia to keep production high and oil prices low. If the U.S. were independent of these oil producers, why ask for help?
• Market watchers also had their eyes fixed on the most recent “OPEC+” meeting, when ministers converged to decide how they would respond to the latest slump in global oil prices.
• Although exports have increased and imports have fallen, the U.S. is still the world’s largest oil consumer, at about 20 million barrels per day — far more than it produces. And while more efficient engines and, to a lesser extent, electric vehicles have helped moderate domestic demand, consumption has actually grown each year since 2012.
The bottom line: Even if the country produced more than it consumed on a long-term basis, global oil prices — which drive pump prices, the main thing drivers care about — would still be affected by OPEC’s decisions, not to mention the health of the Chinese economy, political unrest in Venezuela, and myriad other factors that shape global supply and demand.