In a recent blog, American Fuel & Petrochemical Manufacturers (AFPM) explains why the US imports crude oil despite being the world’s largest crude oil producer:
Supply disruptions tied to the Strait of Hormuz have renewed questions about US energy security and why events halfway around the world still affect energy markets in the US. While the US is the world’s largest crude oil producer and makes more than enough gasoline, diesel and jet fuel to meet domestic demand, the country still imports and exports both crude oil and refined products.
So, if the US produces so much energy, why does it need imports, and why doesn't it simply keep what it produces at home?
The US imports crude oil for two reasons. First, US refineries process more crude oil than the country produces domestically. Second, different refineries need different types of crude oil. The US imports the crude that works best, and most economically, in its refineries and export crude that is a better fit and/or in high demand elsewhere.
Refined products work much the same way. In some parts of the country, especially the East and West Coasts, it can be less expensive to import fuel than to ship it from US refining centres like the Gulf Coast. And, since US refineries also produce more fuel than Americans use, exporting that surplus helps refineries operate efficiently, strengthens global fuel supplies and helps keep fuel costs lower for consumers.
Crude oil
Imports
Most of the crude oil that US refineries process is produced domestically. Yet, the country still imports crude oil for three main reasons:
- Volume: US refineries need more crude oil than the US produces. Record crude oil production in the US is just under 14 million bpd. Refineries need more than 16 million bbl of crude oil every day.
- Crude quality: there are more than 150 different qualities of crude oil produced in the world today. It can be light or heavy, low in sulfur or high in sulfur, can produce a lot of diesel and jet fuel or make mostly gasoline. To run most efficiently and maximise production of the fuels Americans need most, different refineries need different qualities of crude oil. Most of the crude oil produced in the US today is lighter than the ideal range for many facilities, so heavier crude oil imports help create the right mix. US refineries are complex and optimised for heavier crude slates.
- Logistics and infrastructure: even when domestic crude oil is a good fit, it is not always the most economical option for every refinery. For those facilities, importing crude oil is the lower-cost option.
Crude oil imports help meet refinery needs when domestic crude is not available, is not the right fit and/or is not the most economical option.
Exports
Many US refineries run best on heavier crude oil, while much of the crude produced in the US is lighter. Many refineries in Europe, Asia and around the world are designed to run on lighter crude, making US crude oil a valuable export.
The US can import crude oil that best fits its refining system, most economically, and export what is in strong demand, and highly valued, overseas.
Refined products
Imports
The US imports refined products like gasoline, diesel and jet fuel because not every region has enough refining capacity to meet local demand, and not every region can be supplied economically by US refining centres like the US Gulf Coast.
Pipelines connect the Gulf Coast to some parts of the country, but they do not reach everywhere. For some markets, particularly on the East and West Coasts, fuel must be transported by water. Domestic marine shipping can be prohibitively expensive, particularly under the constraints of the Jones Act.
Put simply, imported fuel is often the most affordable source of refined product supply for some parts of the country.
Exports
Because the US refining system is one of the most sophisticated and cost-competitive globally, the US is a leading supplier of refined products at home and around the world.
Diesel is the country's primary finished petroleum product export. While gasoline is the primary transportation fuel in the US, much of the world relies heavily on diesel.
US refineries cannot make gasoline efficiently without also producing diesel, so the US ends up with more diesel than it needs. Exporting that surplus diesel allows the US to sell a product that is in greater demand overseas, maximising the value of the country's refining system and strengthening its position in global energy markets.
Without export markets, refiners would eventually have to reduce overall production, limiting the value of its refining system and reducing supplies of other fuels as well.
The ability to import and export crude oil and refined products keeps the US energy secure, ensuring Americans have the most reliable, affordable access to the fuels they depend on every day — even in times of global uncertainty.