Net Crude Oil And Petroleum Imports Drop To Historic Low

Net crude oil and petroleum imports declined in 2017 to a record low, and the federal government expects net imports to decline even further this year.

The Energy Information Administration (EIA) reported this week that total U.S. crude oil and petroleum product net imports will fall from an annual average of 3.7 million barrels per day (b/d) in 2017 to an average of 2.5 million b/d in 2018 and to 1.6 million b/d in 2019, which would be the lowest level of net oil imports since 1959.

Net imports peaked in 2005 at 12.5 million b/d and have decline 70 percent or 8.8 million b/d by 2017.

Exports of petroleum from U.S. have been a major factor in the U.S. trade deficit narrowing to a seven-month low in April.

The dramatic rise in U.S. crude oil production was a major factor in the rise in U.S. petroleum exports and the reduction in oil imports from foreign countries. Domestic oil production averaged 10.7 million barrels b/d in May, up 80,000 b/d from the April level. EIA projects that U.S. crude oil production will average 10.8 million b/d in 2018, up from 9.4 million b/d in 2017, and will average 11.8 million b/d in 2019.

The EIA also noted that U.S. dry natural gas production increased last year and exports of liquefied natural gas (LNG) increased, too. Dry natural gas production averaged 73.6 billion cubic feet per day (Bcf/d) in 2017. EIA forecasts dry natural gas production will average 81.2 Bcf/d in 2018, establishing a new record. EIA expects natural gas production will rise again in 2019 to 83.8 Bcf/d.  

“Growing dry natural gas production supports increasing forecast LNG exports,” EIA stated. Exports averaged 1.9 Bcf/d in 2017, and EIA forecasts an average of 3.0 Bcf/d in 2018 and 5.1 Bcf/d in 2019.

EIA expects West Texas Intermediate (WTI) crude oil prices to average almost $70 per barrel, and natural gas spot prices at Henry Hub to average $2.99 per million British thermal units this year.

For the 2018 April–September summer driving season, EIA forecasts U.S. regular gasoline retail prices to average $2.87 per gallon, up from an average of $2.41 last summer. The higher forecast gasoline prices are primarily the result of higher forecast crude oil prices. Monthly average gasoline prices are expected to reach a summer peak in June of $2.92 and are forecast to decline gradually afterwards to $2.84 in September.

EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 32 percent in 2017 to 34 percent in 2018 and 2019. The forecast electricity generation share from coal averages 28 percent in 2018 and 2019, down from 30 percent in 2017. The nuclear share of generation was 20 percent in 2017 and is forecast to be 20 percent in 2018 and 19 percent in 2019. Nonhydropower renewables provided slightly less than 10 percent of electricity generation in 2017 and are expected to provide more than 10 percent in 2018 and nearly 11 percent in 2019. The generation share of hydropower was 7 percent in 2017 and is forecast to be about the same in 2018 and 2019.

Alex Mills is the former President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author.