It is no secret that the shale revolution dramatically altered the geopolitical map of oil production, giving the US a prominent role, and reducing our reliance on imports. Along the path to the much coveted self-sufficiency, the US has also had a chance to export massive amounts of crude.
According to the US Energy Information Administration, in the first quarter of 2017, American exports have exceeded those of several members of OPEC. This was unthinkable even a mere four years ago. Before the lift of the ban on crude exports, the US was only exporting 50,000 barrels per day -mainly to Canada, thanks to a ban exemption- a figure that appeared insignificant when compared to OPEC's smallest exporters.
The 40-year ban, a complicated heirloom of the Arab oil embargo, was lifted in 2015 in response to the domestic drilling and production boom. Since then, the US has been working on opening markets and preparing to increase export volumes. This year, all those efforts are really yielding their fruits.
Nevertheless, the US still imports 10 times more crude oil than it exports. As OPEC members and allies have made efforts to try to integrate the US into OPEC meetings, arguing that it should because it has now become “a big producer,” an alignment of the US with OPEC is naturally unlikely for political reasons.
As OPEC and Russia agreed to cut down production by 1.8 million barrels a day, the US has been able to secure a larger share of the global market. Compliance for these long-awaited reductions has been surprisingly high.
Production in the US is now about twice as big as it was in 2008. However, America's massive refining system is configured to process traditional, heavier crude, rather that the shale oil that constitutes the bulk of America's production.
This is one of the reasons our country is still a crude importer. Traditional oil offers higher margins of returns for refineries, and when these complex facilities do not operate at full capacity, the cost-benefit equation does not add up. On the other hand, energy exports create much needed domestic jobs. Thus, at the present junction, the US still needs to import and export crude.
Mexico, whose production has dwindled by a third since 2004, is now one of the world's top consumers, relying heavily on imports from the US. The US export boom also owes a lot to China, which is the most rapidly growing market for US oil exports. This is a trend that will continue to benefit the US as long as shale oil producers continue to cut down costs, putting out crude that can still be profitable at prices as low as $40 per barrel.
As US producers focus on efficiency, lower costs, and higher per-barrel returns, the increased consumption of emerging economies paired with the reduced output from OPEC and its allies will certainly continue to create a favorable landscape for increasingly profitable US crude exports.