By the numbers: Should America export oil?

With the likely approval of the Keystone XL pipeline project adding a 36 inch diluted bitumen link to U.S. Gulf Coast refineries, U.S. finished petroleum products production is set for a major ramp up. The U.S. net crude oil imports graph shows how Canada will fit in.

Note that OPEC imports have declined significantly since 2007 while Canada’s exports to the U.S. have risen since 2010, with total foreign imports down significantly over the six-year period.

While declining OPEC numbers are understandable, Venezuela’s reserves are estimated by many to exceed those of Saudi Arabia; current political realities prevent access from major U.S. oil companies to those reserves, something which will change quickly if the Venezuelan government shifts to the right. If this happens, Venezuelan oil, combined with new fracking technology and increasing production from the Bakken formation, may drive U.S. dependence on Middle East oil to zero, or more likely move the U.S. into the export realm.

What will they do with all that crude?

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The second graph shows one possibility. Note that total refined products, principally kerosene [typically diesel fuel] and gasoline are climbing significantly as an export product in the U.S..

With energy efficiency and environmental concerns flattening energy demand in the U.S., export of refined products is a logical outcome of Alberta bitumen flooding Gulf Coast oil refineries.

Crude oil export has been regulated in the U.S. since the 1973 oil crisis, with special exceptions granted by application. The U.S. oil lobby would like to see this restriction removed, creating a new profit centre and reducing excess supply at U.S. refineries, maintaining prices and margins for refined products.

The effect will prop up retail pricing for gasoline and diesel fuel. If unlimited exports are allowed however, Alberta bitumen could boom.

The wild card is Venezuela. If that nation comes into play, we’ll need to look to the Energy East and Northern Gateway programs to move our product East-West instead of North-South.