By Sumit Roy
Crude oil exports are currently banned in the U.S., a consequence of the energy crisis of the 1970s. But that hasn’t stopped the country from exporting record amounts of oil anyway—in the form of petroleum products. Essentially a loophole in the 1975 law, while crude exports are forbidden, exports of refined products such as gasoline and distillate fuels are completely legal.
For decades, none of this really mattered. As the U.S. saw its demand grow and production plummet, it became increasingly reliant on oil imports. Exports were the last thing on anyone’s mind.
But that’s all changing now, and those trends are in reverse. U.S. demand is slowly but steadily declining as automobiles become more fuel efficient, while production is surging on the back of the shale oil boom.
That said, the U.S. still consumes more oil than it produces, and is not expected to be completely oil independent until the year 2035. However, where the U.S. has a significant amount of excess capacity is in the refining sector. Each year, consumers are using less and less gasoline and heating oil. Thus, refiners have turned to other markets to sell their products.
According to the Energy Information Administration, exports of petroleum products averaged 3.5 million barrels per day in 2013, and hit a record 4.3 million barrels per day in December.
The U.S. has been exporting worldwide. Refiners have found eager customers in developing regions such as South America and Africa. The EIA points out that the relatively low cost of crude oil and natural gas in the U.S. gives the country’s refiners an advantage over refiners elsewhere. Thus, petroleum product exports—which have more than doubled over the past five years—will likely continue higher in the coming years.
Ironically, while U.S. product exports grow, the country remains reliant on product imports as well. “Although the Gulf Coast is a large net exporter of gasoline, given present infrastructure constraints the East Coast continues to import substantial amounts of gasoline from Europe and Canada,” explained the EIA.
“Likewise, imports play a critical role in supplying distillate and propane during the winter, particularly on the East Coast, when in-region production along with shipments from other regions are insufficient to meet the increases in demand, especially during very cold weather, as much of the country experienced this past winter,” said the EIA.