A major shift in energy production has taken place, and the United States is grabbing headlines for becoming the world’s leading producer of oil and natural gas in 2013—overtaking Russia.1
The energy production surge in the United States is impacting trade flows and lowering imports of energy. Over the long term, the change in the import/export mix of energy-related products could have an impact on the U.S. dollar—with decreasing imports of oil lowering the supply of dollars that have to be sold by foreign countries, and increased exports of refined products creating more demand for U.S. dollars when the goods are paid for.
Drilling techniques called hydraulic fracturing, or fracking, have resulted in a higher output of crude in the past years, and this is projected to continue in the years ahead.2 Consider this:
• Average oil production in October was over 7.8 million barrels per day, which is 19% higher than a year ago.3
• Rising crude supplies from fields including North Dakota’s Bakken shale and the Eagle Ford shale in Texas have helped the U.S. become the world’s largest exporter of refined fuels (including gasoline and diesel).4
• According to the EIA, Texas pumped 2.575 million barrels a day in June—if Texas were its own country, it
would rank 15th in the world in terms of oil production.
• The U.S. met 87% of its energy needs in the first five months of 2013 and is on target to hit the highest annual rate since 1986.5 While the United States is still far from being energy independent, it is making great strides.
Below is a graph of the U.S. imports and exports of crude oil and petroleum products going back to 1991 that can be found on the U.S. Energy Information Administration website. There has been a clearly visible sustained increase in exports over the last few years and a substantial drop in imports.
• Export surge: In 2006, the U.S. exported fewer than 1 million barrels per day. Recent statistics show the U.S. exporting over 3 million barrels per day.
• Imports down: Imports of crude oil and petroleum have dropped from a high of 14 million barrels per day in 2007 to under 10 million barrels per day in recent data.
o But some of these imports of oil are being used to create refined products such as gasoline, which are then exported. When one looks at net imports (imports minus exports) there is even a sharper collapse.
• Net imports cut in half: Net imports of oil have dropped from a high of over 13 million barrels per day to just above 6 million barrels per day. This is creating a dramatic change in terms of oil-related trade.