The domestic oil boom that occurred over the past half decade has led to a significant decline in oil imports to the United States. In fact, according to an October 2015 article from the Wall Street Journal, “between 2010 and 2014 “U.S. crude imports declined 20 percent” as the nation was able to rely more on oil and gas produced within our nation’s borders.
Of course, many of us are well aware of the recent struggles within the oil and gas industry that have been associated with a massive drop in price, leading to stagnation for some companies, and even bankruptcy for others. What may not be as well known, however, is that this oil bust has led the nation to turn its eyes overseas and begin importing heavily once again.
Why Are United States Companies Choosing to Import Oil from Oversees?
Over the past years, a surge in domestic production has afforded the United States the opportunity to decrease oil and gas imports from other countries, instead turning to operators within its borders. And doing so, in fact, has “allowed the U.S. to be more flexible in its foreign policy and given the U.S. more global heft.” Now, however, some refineries are once again looking overseas for help; the article from the Wall Street Journal asserts that Nigeria has been the source of oil imports, at least for some.
But why, and certainly why now, would refineries choose to purchase oil from overseas producers instead of from those stateside? The answer largely has to do with price; as the nation has witnessed a slowdown in the production of high-quality crude oil, so too has it seen an increase in price, especially when compared to similar quality oil from other countries. As the supply of high-quality oil decreases each day, the price continues to rise as a result, making it less enticing for operators to purchase from domestic oil producers.
Will Imports Continue to Rise?
Currently, the United States is still importing fewer barrels of oil than it was just five years ago, when it brought in, on average, 9.2 million barrels per day. That’s not to say this spread will last forever, though; in fact, the U.S. currently imports 8 million barrels daily, and this could continue to increase into the foreseeable future.
We cannot say for certain what to expect in the future in regards to oil and gas imports to the United States. There’s no predicting the trend sans-speculation, but all indications point to lower gas prices being bad for domestic production. The domestic industry, while gaining independence for a short period, may be once again leaning toward being at the mercy of foreign policy.