U.S. falls from top spot among world oil importers

China this week surpassed the United States as the world’s largest oil importer, according to a report released
this week by the U.S. Energy Information Administration.

 

By Adam Wilmoth (/more/Adam Wilmoth) (https://plus.google.com/103410491206050371764?rel=author) Modified: March 28, 2014 at 11:00
am • Published: March 27, 2014

 

We’re no longer No. 1. And that’s a good thing.
The U.S. Energy Information Administration confirmed this week that China in September surpassed the United States as the world’s
top oil importer. The report further highlights how the tight oil boom throughout the country in less than five years has reversed
decades-long trends and upended long-held beliefs about world energy supplies.
The report shows domestic imports have dropped by more than a third in just more than
three years, falling to less than 6 million barrels per day, down from more than 9 million
barrels per day in early 2011. Of the remaining imports, more than half is from Canada and
Mexico.
Another EIA report this week also points to how tight oil is affecting domestic and global oil
markets. The agency data shows that in the fourth quarter of 2013, the United States
represented 10.4 percent of the world’s total oil production and that more than 40 percent
of the country’s oil came from shale and other tight oil formations.
This week’s reports echo the domestic oil industry’s emphasis on how increased oil
production throughout the United States has significantly reduced domestic demand for
crude from the Middle East.
But they also raise questions about the sustainability of the trend.
China surpassed the United States in imports far more because U.S. demand for foreign crude dropped than because Chinese demand
increased. While imports into the United States have tumbled by more than 3 million barrels a day over the past three years, imports to
China are up by less than 1 million barrels a day.
For now, that’s good news for producers and consumers alike.
Just a few years ago, global demand and global production were almost equal. In that world, even the hint of unrest in the Middle East or
other key parts of the world was enough to send global oil prices surging.

Today, however, increased U.S. oil production has created a cushion. When the United
States and its allies imposed sanctions on Iranian oil sales, prices held fairly constant. When
Russia invaded and claimed Crimea from Ukraine, prices jumped slightly for a day or two
before quickly returning to pre-invasion levels.
The cushion is helpful in limiting price spikes, but if U.S. oil production continues to outpace
global demand, that eventually could lead prices to fall.
Few consumers would complain if prices slipped a bit — they have been at or near record
highs for much of the past three years.
But a prolonged price drop could threaten the recent growth.
Tight oil production is expensive. It’s not uncommon for a single well to cost between $8 million and $12 million. At that rate, production
could be scaled back if oil prices fall too much.
Domestic producers say oil will continue to be a global commodity priced on a global market. They are convinced global demand will
continue to grow as Asian economies strengthen. That’s also a large part of why they are pushing Congress to end its ban on domestic oil
exports.
Whatever happens, it’s a far different world today than just five to 10 years ago when M. King Hubbert’s disciples were preaching the
end of oil

 

Wilmoth, Adam. “U.S. Falls from Top Spot among World Oil Importers.” NewsOK.com. The Oklahoman, 27 Mar. 2014. Web. 28 Mar. 2014.

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