US Now Net Oil Exporter – First Time in 75 Years

America became a net oil exporter in November, breaking 75 years of continued dependence on foreign oil and marking a pivotal moment in our move toward “energy independence.” The US exported 3.2 million barrels of oil a day during the week that ended on Nov. 30, along with about 5.8 million barrels a day of gasoline, diesel, jet fuel and other products.

Those exports exceeded combined imports of 8.8 million barrels a day in the week, making the country a net exporter of 211,000 barrels per day (bpd) during the last week of November, said the Energy Information Agency (EIA). That’s a new record and it is expected to increase in 2019.

Energy analyst Brian Youngberg summed it up as follows: “It’s been a remarkable change from 10 years ago, when we were worried about peak supply. The world would be in a difficult situation if we had not seen the shale revolution. With the growth we’ve had, we’re now able to export all over the world.”

The shift in net exports is the dramatic result of an unprecedented boom in American oil production, with thousands of wells pumping from the Permian region of Texas and New Mexico to the Bakken in North Dakota to the Marcellus in Pennsylvania.

The massive Permian may be even bigger than previously thought. The Delaware Basin, the less drilled part of the Permian field, holds more than twice the amount of crude as its sister, the Midland Basin, the US Geological Survey reported in December.

The shale revolution has transformed some oil wildcatters into billionaires and the US into the world’s largest petroleum producer, surpassing Russia and Saudi Arabia. The power of OPEC has been diminished, undercutting one of the major geopolitical forces of the last half century. The cartel and its allies met in Vienna in December, trying to make a tough choice to cut output and support prices, risking the loss of more market share to the US. While no official decision was made at that meeting, Saudi Arabia has recently reduced daily oil production by 0.5 million bpd.

While US oil and refined products exports hit a new record in November, the country has been heading in that direction for years. November’s dramatic shift came as data showed a sharp drop in imports and a jump in exports to a record high. However, given the volatility in weekly export/import data, the US will still be a net importer some of the time – but not for long.

US crude exports are poised to rise even further, with new pipelines from the Permian to the Texas Gulf in the works and at least nine export terminals planned that will be capable of loading supertankers. The only facility currently able to load the largest ships, the Louisiana Offshore Oil Port, was on pace to load more oil in December than it has in any other month.

While the net balance shows the US is selling more petroleum than buying, American refiners continue to buy millions of barrels each day of overseas crude and fuel. The US imports more than 7 million barrels a day of crude from all over the globe to help feed its refineries, which consume more than 17 million bpd. As a result, the US is now the world’s top fuel supplier.

On another front, the US became a net exporter of natural gas in 2017. And exports increased significantly in 2018. We don’t have final figures for the year yet, but we do know that natural gas exports were rising at more than double the rate in 2017.

US natural gas exports have increased significantly with the addition of new liquefied natural gas (LNG) at export facilities in the lower 48 states. US exports of LNG through the first half of 2018 rose 58% compared with the same period in 2017.

In addition to the growing trend in petroleum exports and natural gas, we are now pumping more oil out of the ground than ever. According to the US Energy Information Agency (EIA), daily oil production in America hit a new all-time high of 11.7 million bpd in November.

Of course, the good news on petroleum exports and production has been bad news for oil prices. West Texas Intermediate Crude futures nosedived from above $75 per barrel in early October to below $45 at the low last month.

With oil and gas production increasing every year recently, the question is whether supply will outpace demand, especially with the global economy slowing. That is one reason energy prices have come down significantly in the last several months. It will be an interesting trend to watch.

HAPPY NEW YEAR!!