For the first time in more than 60 years, the United States is now a net fuel exporter. Yes, you heard that right, the US exported 27 million more barrels of petroleum products than it imported in 2011. Compare that to 2005 when we imported almost 900 million more barrels than we exported. Needless to say, this by no means declares us “energy independent”, but it does raise some interesting points that deserve mention.
For starters, growth in emerging countries is responsible for driving much of our export demand. Countries such as Mexico, Argentina, Brazil, Singapore, and the Netherlands are now all net importers of US fuel. Since 2006, Mexico’s demand for fuel has increased by 2/3 while Singapore’s demand has quadrupled.
Another reason for the shift is due to the recession and fragile recovery in America. Simple truth is that with 8% unemployment, many drivers are no longer commuting to work everyday. However, the bright spot here is that many Americans are now driving smaller, more efficient cars rather than the SUV’s that once roamed the freeways. Add in the fact that automakers have increased the fuel efficiency of their engines from 21.9 MPG in 2000 to 23.8 MPG in 2009 and you begin to see a trend.
The biggest contributor to this turnaround however, is the increased production of petroleum products within the USA. This includes fuels such as ethanol as well as natural gas. Recently, it has been stated that the US is sitting on over 100 years worth of natural and shale gas supply. So large is the supply, that the price of natural gas has plummeted 32% over the course of 2011 leading some companies to flare off the excess gas because their pipelines are full. Natural gas is a fuel in itself, but also a by-product of drilling for oil. At $100 a barrel of oil, you can imagine how much drilling has been taking place.
What ever the reason, one thing is certain – the US is still a major user of petroleum. No matter whether we are a net importer or exporter, consumers will still be getting hit hard at the pump due to rising demand from emerging economies. As far as the glut of natural gas is concerned, approximated half of US households use nat gas for heating, but our industrial and commercial usage is rather limited. While we might see lower heating bills, the US needs to begin building out a nat gas infrastructure for long haul trucking or even locomotives that are powered by the fuel. There are several drawbacks to using natural gas that I will highlight in subsequent posts, but the point of this article is to show how recent discoveries and booming production changed an energy trend 6 decades in the making. This abundant supply of cheap natural gas should add to our energy portfolio and help the US restore it’s economy and create jobs. What it should not do is switch our demand from one single energy source to another.