January 24, 2019
U.S. Oil Imports, Exports, and Energy Security
In December 2015, P.L. 114-113 lifted restrictions on U.S.
Why is domestic oil exported instead of being used
exports of crude oil, allowing U.S. exporters full access to
domestically? Exports are likely taking place for three
world oil markets. The restrictions had been in effect for 40
reasons. First, the type of oil that has come into the U.S.
years. Lifting the export restrictions addressed the changing
supply picture in the past five years is light, sweet (low
nature of U.S. oil supply which is characterized by growing
sulfur) oil. Many U.S. refineries are not optimized to use
output of light oil. Due to the rapidity with which these oil
this type of oil. As a result, U.S. oil is shipped overseas
supplies have entered the market, producers initially
while oil of a type appropriate to U.S. refinery demand is
encountered infrastructure bottlenecks in transporting the
imported. This type of trade transaction increases U.S.
new oil supplies to buyers, as well as noting a fundamental
integration with the world oil market, and it maximizes the
mismatch between the characteristics of the new oil
value of the output of the oil refining industry. Second,
supplies and the desired crude oil inputs of U.S. refineries.
logistical cost issues may determine the sourcing of crude
Many producers of the new oil supplies found that they
oil. Given the location of a refinery, it may be cheaper to
could only sell their oil at a discount to both West Texas
procure oil overseas than to purchase and ship domestic oil
Intermediate (WTI) and other world reference prices of
given transportation constraints. Third, some large U.S.
crude oil (e.g., Brent and Dubai). As a result, low realized
refineries are owned by foreign national oil companies and
prices threatened the potential growth of the U.S. oil
they may choose to use their own nation’s oil, imported into
industry. Producers saw entry into the world oil market as a
the United States in their operations. For example,
way to increase demand for their oil and to close the price
Venezuela owns Citgo Petroleum Corporation and Saudi
spread.
Arabia owns Motiva Enterprises Company, both with
refineries in the Gulf Coast region.
While opponents of the oil export restrictions pointed to
enhanced domestic oil supply and job growth, proponents
Crude oil imports have fallen. From 2008 to 2012 the
of the ban claimed that its repeal could lead to higher
United States imported on average about 9 mmb/d. In the
domestic gasoline prices as well as lower capacity
next three years, 2013 to 2015, imports averaged about 7.4
utilization rates and fewer jobs in the refining industry.
mmb/d, a decrease of about 18%. In the three years since
Also of concern were issues of energy security. Some
the lifting of the restrictions, crude oil imports have
define energy (oil) security in terms of oil independence.
averaged about 7.9 mmb/d, an increase over the previous
From this point of view, domestic oil supplies replacing
three years, but still less than the 2008 to 2012 period. The
imports signified reduced dependence on the world oil
data suggest that while imports of crude oil declined with
market, and hence, greater oil security. Exporting U.S. oil
the lifting of the export restrictions, they then began to
would in their argument leave the United States dependent
increase, providing some evidence to suggest U.S.
on imports and the world oil market. Regardless, the United
dependence on world markets might be increasing.
States would remain connected to the world oil market
through crude oil imports and petroleum product
Over the same period, product supplied to the U.S. market
imports/exports.
(the Energy Information Administration measure of
consumption) increased from 19.6 mmb/d in 2016 to 19.9
Evaluating Crude Oil Imports and
mmb/d in 2017 and, based on available 10-month data for
Exports
2018, is set to total about 20.3 mmb/d. A possible
Three years have passed since the lifting of the crude oil
interpretation of these data might conclude that the
restrictions, and an evaluation of the effects, both in terms
approximately 700 mb/d increase in U.S. product supplied
of trade and energy security, can be undertaken.
from 2016 to 2018 resulted largely from the 500 mb/d
increase in imported crude oil, again raising the question as
Crude oil exports have risen. From 2008 to 2012 the United
to whether growth in the U.S. market is tied to import
States exported on average about 45 thousand barrels of
growth.
crude oil per day (mb/d). In the next three years, 2013 to
2015, a time characterized by growing U.S. shale oil
This picture is altered when net imports are considered. Net
production, but with the export restrictions still in effect,
imports are defined as gross imports minus exports. This
exports averaged about 316 mb/d (mostly to Canada which
measure brings into sharper focus a nation’s dependence on
was not subject to the restrictions), a six-fold increase. In
the global market for commodities it both imports and
the three years since the lifting of the restrictions, crude oil
exports.
exports have averaged over 1.2 million barrels per day
(mmb/d), a four-fold increase. Exports have increased each
Crude oil net imports have fallen. From 2008 to 2012, U.S.
year since the restrictions were lifted, rising from 591 mb/d
imports of crude oil averaged about 9 mmb/d. In the next
in 2016 to 1.1 mmb/d in 2017 and 1.9 mmb/d in 2018.
three years, 2013 to 2015, net imports averaged 7.1 mmb/d,
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U.S. Oil Imports, Exports, and Energy Security
a decline of 21%. In the three years since the lifting of the
further improvements in the net import position, as U.S.
export restrictions crude oil net imports have averaged 6.7
petroleum product exports expand.
mmb/d, a decline of about 6%. In addition, quantity of net
imports of crude oil per year has shown a downward trend;
Oil Security
that is, it has declined every year since 2015 on a year-on-
While the lifting of crude oil export restrictions and
year basis.
favorable U.S. oil production trends have not yielded total
oil independence and security, important progress has been
As a result of rising U.S. crude oil production, coupled with
made.
rising exports of crude oil, the nation’s net dependence on
foreign oil supplies has declined, and given the trend in net
U.S. crude oil imports have most recently averaged 7.9
imports, is likely to continue to fall. This implies that a
mmb/d. Petroleum product exports have averaged 5.1
portion, about 1.2 mmb/d of U.S. import dependence, might
mmb/d, yielding a net draw on world oil markets by the
be considered an adjustment of U.S. crude oil production to
United States of about 2.8 mmb/d. In a sense, about 5
reflect differences in quality desired in oil supply, or
mmb/d of U.S. crude oil imports exist specifically to supply
locational and cost differentials.
nations around the world with petroleum products, rather
than the domestic market. Petroleum products generally
Petroleum Product Imports/Exports
have a higher value per barrel than crude oil, value captured
To fully evaluate the effects of the full integration of the
by U.S. refiners and exporters, enhancing the financial
United States into the world oil market, petroleum products
health of exporting firms. Overseas markets have allowed
also must be considered. Crude oil has no major direct
refiners to operate closer to peak capacity and maintain
consumption use in itself. Oil must be processed at a
high levels of output and employment.
refinery to yield a wide range of petroleum products
including transportation fuels such as gasoline, diesel fuel,
As the United States expands oil exports, this provides
and aviation fuel. In addition, home heating oil, propane,
nations around the world an alternative to importing from
and a wide variety of other products used by various
the Organization of the Petroleum Exporting Countries
industries are included in the output of the refining industry.
(OPEC) or Russia among others. Reduced direct
dependence and increased diversification reduces OPEC’s
Petroleum product exports have risen. From 2008 to 2012,
and other nations’ ability to control prices and use oil as a
the United States exported on average about 2.2 mmb/d of
tool to achieve their political objectives. Oil prices can
petroleum products. In the next three years, 2013 to 2015,
become more market determined and less tied to specific
as shale oil production was increasing, but without the
interests. Some analysts have seen the United States
lifting of export restrictions on crude oil, the United States
becoming a “swing producer” for the world market, and
exported about 3.8 mmb/d of petroleum products, an
itself exerting influence on world oil prices.
increase of about 72%. For the period 2016 through the first
10 months of 2018 the United States exported about 5.1
Crude oil and petroleum product imports from the United
mmb/d of petroleum products, a 34% increase.
States are highly successful among U.S. allies, especially in
the important Asian markets. This success creates an
U.S. petroleum product exports to various countries/
important economic bond along with political and military
regions have increased. In Latin America, Peru, Brazil, and
ties. U.S. crude exports, which offer a combination of
Guatemala have seen imports from the United States
attractive crude grades, private market financing and low-
increase over the period 2015 to 2017 by 37%, 106%, and
risk contract fulfillment are well positioned to expand in
80%, respectively. These and other nations now depend on
Asia and displace OPEC supplies. In addition, the ability of
U.S. supply, supporting the strength of the U.S. refining
private oil firms to adapt to changing conditions more
industry. Among close U.S. allies, Japan and South Korea
effectively than state oil companies and generally remain
have rapidly increased imports of U.S. petroleum products
immune to political pressure has also proven to be attractive
by 95% and 93% over the 2015 to 2017 period. Trade in
to international buyers.
petroleum products creates important trading relationships
between nations where both partners to trade might be
It is unlikely that the United States can gain full
expected to gain.
independence, or isolation from, the world oil market. The
price of oil is an international price reflecting the demand
The net liquids import/export position of the United States,
and supply conditions in a large world market. Changes in
considering crude oil and petroleum products, has
demand and/or production in any nation creates a new set of
improved. From 2008 to 2012, U.S net imports averaged
incentives for all oil consumers and producers. A set of
about 9.2 mmb/d. In the next three years, 2013 to 2015, the
mutual dependencies—where many nations are linked by
U.S. net imports were 5.3 mmb/d, a reduction of about
trade, and no set of oil suppliers can easily enforce its own
42%. For the period 2016 through the first ten months of
will, or dictate trade—is likely to approximate energy
2018 U.S. net imports were about 2.7 mmb/d, a further
security for nations in the market.
decrease of 49%. In addition, U.S. crude oil production is
widely expected to increase, while petroleum product
Robert Pirog, Specialist in Energy Economics
consumption growth in the United States is expected to be
modest. A combination of growing production and
IF11095
modestly increasing domestic consumption could lead to

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U.S. Oil Imports, Exports, and Energy Security



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