The decline in US oil imports

The drop in net imports of crude and petroleum products combined (oil) was the major contributor to the US reaching its lowest net trade deficit in November last year since 2009, however, the trade deficit increased in December last year. US oil trade, the dominant component of overall US energy trade, has seen major changes in recent years. In both absolute and percentage terms, US net import dependence measured volumetrically has been declining since 2005.

2005 – 2013

Even though the volume of net oil imports peaked in 2005, the value of monthly net oil imports generally continued to rise through July 2008, when it exceeded US$ 40 billion due to the sharp run up in oil prices through the first half of the year. Net import values fell sharply in the second half of 2008, as volumes fell modestly and prices fell sharply. Between early 2009 – early 2011, rising prices drove the value of net oil imports higher, even as import volumes remained flat. Since early 2011, a falling volume of crude oil imports as domestic product has risen sharply and the emergence of net product exports have driven the volume and value of net oil imports lower. The reductions occurred despite the annual average oil price in 2012 and 2013 being the highest in historical levels.

The US has historically been a significant net importer of both crude oil and petroleum products. Yet, stagnating domestic product demand combined with very competitive refinery infrastructure and strong global product demand turned the US into a significant net exporter of petroleum products, as of 2011.

2013 and onwards

In 2013 crude oil imports by value were down 16% year on year. The EIA’s February short term energy outlook forecasts continued rapid growth in domestic US crude oil production both this year and next, which should further reduce the volume of net crude oil imports over the period. Given the continued flatness in domestic demand and continued access of US refiners to domestic crude streams and relatively low cost natural gas to fuel their refineries, the country is likely to maintain its current role as a major net exporter of distillate fuels and other products to external markets, especially those in the Atlantic Basin. The upper limits to near term product export growth are likely to be defined by refinery capacity, while the lower limits to product exports likely depend on potential weakness in foreign product demand, perhaps responding to weaker than expected economic conditions.

Edited from various sources by Claira Lloyd

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