How the US Became the World’s Top Exporter of Refined Petroleum Products
The United States is known for its vast natural resources, especially oil and gas. But did you know that it is also the world’s number one exporter of refined petroleum products? In this article, we will explore how the US achieved this feat and what are the benefits and challenges of this position.
Refined petroleum products are products derived from crude oil, such as gasoline, diesel, jet fuel, heating oil, and liquefied petroleum gas (LPG). They are used for transportation, heating, electricity generation, and industrial purposes. According to the World Bank, the global market for refined petroleum products was worth $1.4 trillion in 2020, accounting for 7.5% of the total merchandise exports.
The US exported $78.2 billion worth of refined petroleum products in 2020, making it the top exporter in the world. This was followed by Russia ($55.6 billion), China ($40.9 billion), India ($36.8 billion), and South Korea ($35.9 billion). The US also ranked fourth in crude oil exports, behind Saudi Arabia, Russia, and Iraq.
How did the US become the top exporter of refined petroleum products?
There are several factors that contributed to this achievement, such as:
The shale revolution:
The US has experienced a boom in oil and gas production since the late 2000s, thanks to the development of hydraulic fracturing (fracking) and horizontal drilling technologies. These techniques enabled the extraction of oil and gas from shale formations that were previously inaccessible or uneconomical. According to the US Energy Information Administration (EIA), the US crude oil production increased from 5 million barrels per day (bpd) in 2008 to 12.2 million bpd in 2019, making it the largest producer in the world.
The refining capacity:
The US has the largest refining capacity in the world, with 135 refineries operating as of January 2020. These refineries have a combined capacity of 18.6 million bpd, which is more than enough to meet the domestic demand of 14.5 million bpd. The US refineries are also among the most complex and efficient in the world, capable of producing a wide range of high-quality products from various types of crude oil.
The export ban lift:
Until 2015, the US had a ban on exporting crude oil that was enacted in 1975 in response to the Arab oil embargo. However, as the domestic production surged and the global oil prices plummeted, the US Congress passed a bill to lift the ban in December 2015. This allowed the US producers to access new markets and optimize their operations. The US also relaxed some restrictions on exporting refined petroleum products in recent years, such as allowing exports to Mexico without a license.
The market demand:
The US has a competitive advantage in exporting refined petroleum products to some regions that have a high demand but a low supply of these products. For example, Latin America is a major destination for US exports, as many countries in this region have insufficient or outdated refining capacity and rely on imports to meet their fuel needs. The US also exports to Europe, Asia, Africa, and Oceania.
What are the benefits and challenges of being the top exporter of refined petroleum products?
Some of the benefits include:
Economic growth:
Exporting refined petroleum products generates revenue and creates jobs for the US economy. According to a study by ICF International, every $1 billion increase in refined product exports supports about 7,000 jobs across various sectors. Exporting also helps reduce the trade deficit and increase the national security by diversifying the sources of income.
Environmental protection:
Exporting refined petroleum products can help reduce greenhouse gas emissions by displacing more carbon-intensive fuels in other countries. For example, exporting liquefied natural gas (LNG) can help replace coal for power generation in countries like China and India, which are major emitters of carbon dioxide. Exporting also helps reduce flaring and venting of natural gas that would otherwise be wasted or burned at the wellhead.
Diplomatic influence:
Exporting refined petroleum products can help strengthen the US’s strategic alliances and partnerships with other countries that depend on these imports. For example, exporting LNG can help enhance energy security and stability in Europe, which faces geopolitical risks from Russia’s dominance in natural gas supply. Exporting can also help promote human rights and democracy by supporting countries that share these values.
Some of the challenges include:
- Market volatility: Exporting refined petroleum products exposes the US to fluctuations in global oil prices and demand, which can affect its profitability and competitiveness. For example, when the COVID-19 pandemic hit in 2020, the global demand for refined products collapsed, leading to oversupply and low prices. The US exports dropped by 13% from 2019 to 2020, according to the EIA.
- Infrastructure constraints: Exporting refined petroleum products requires adequate infrastructure, such as pipelines, terminals, ports, and ships, to transport and deliver them to the foreign markets. However, some of these infrastructures are aging, congested, or insufficient, which can limit the export potential and increase the costs. For example, the US Gulf Coast, which accounts for about 90% of the US exports, faces bottlenecks and delays due to limited port capacity and ship availability.
- Regulatory uncertainties: Exporting refined petroleum products is subject to various federal, state, and local regulations, as well as international agreements and treaties, that can affect its feasibility and viability. For example, the US has to comply with the International Maritime Organization’s (IMO) rules on sulfur content and greenhouse gas emissions of marine fuels, which can increase the costs and complexity of exporting. The US also has to navigate the trade policies and tariffs of other countries, which can create barriers or opportunities for exporting.
In conclusion, the US has become the world’s top exporter of refined petroleum products by leveraging its abundant oil and gas resources, its advanced refining capacity, its favorable policy environment, and its market demand. This position brings many benefits and challenges for the US economy, environment, and diplomacy. As the global energy landscape evolves, the US will have to adapt and innovate to maintain its leadership and competitiveness in this sector.
Number One Export of USA: How It Affects Global Demand
The United States is one of the world’s largest exporters, selling goods and services worth over $2 trillion in 2022. But what is the number one export of USA, and how does it influence the global demand in its industry? In this blog post, we will explore the answer to this question using some statistical data and analysis.
Refined Petroleum Oils: The Top Export Product of USA
According to the World’s Top Exports website, the top export product of USA in 2021 was refined petroleum oils, with a value of $78.6 billion. This category includes gasoline, diesel, jet fuel, kerosene, and other products derived from crude oil. Refined petroleum oils accounted for 4.5% of the overall exports sold by the United States in 2021.
The United States ranks among the world-leading nations for exporting refined petroleum oils, along with Russia, Saudi Arabia, Iraq, and China. The main destinations for US refined petroleum oils are Mexico, Canada, Brazil, Netherlands, and Japan.
Global Demand for Refined Petroleum Oils: Trends and Factors
The global demand for refined petroleum oils is influenced by several factors, such as economic growth, population, income, technology, environmental policies, and geopolitical events. According to the International Energy Agency (IEA), the global demand for refined petroleum products declined by 8.7% in 2020 due to the COVID-19 pandemic and its impact on mobility and economic activity. However, the IEA projects that the demand will recover by 5.4% in 2021 and 3.1% in 2022 as vaccination programs advance and restrictions ease.
The IEA also expects that the demand for refined petroleum products will vary by region and product type. For example, the demand for gasoline and diesel is expected to increase in Asia, Africa, and Latin America, while it is expected to decline in Europe and North America due to efficiency improvements and electric vehicle penetration. The demand for jet fuel is expected to remain below pre-pandemic levels until 2024 due to reduced air travel. The demand for petrochemical feedstocks is expected to grow faster than other products due to rising plastics consumption.
The Future of US Refined Petroleum Oils Exports
The United States has become a major exporter of refined petroleum oils in recent years, thanks to its abundant shale oil production and advanced refining capacity. However, the future of US refined petroleum oils exports depends on several factors, such as the global demand recovery from the pandemic, the competition from other exporters, the environmental regulations and policies, and the technological innovations. The US will need to adapt to these changing market conditions and continue to provide high-quality and competitive products to its customers around the world.
References:
https://www.census.gov/foreign-trade/Press-Release/2020pr/ft900_2012.pdf
https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/usa/all/show/2016/
https://www.bea.gov/data/intl-trade-investment/international-trade-goods-and-services
https://www.eia.gov/todayinenergy/detail.php?id=46676
https://www.worldbank.org/en/topic/trade/brief/trade-data
https://www.eia.gov/energyexplained/oil-and-petroleum-products/refining-crude-oil.php
https://www.eia.gov/todayinenergy/detail.php?id=48936
https://www.api.org/news-policy-and-issues/news/2019/01/30/api-study-us-crude-oil-and-natural-gas-proved-reserves-set-new-records-in-2017
https://www.eia.gov/todayinenergy/detail.php?id=42255
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