It is no secret that the United States is sitting on an 80-year record high supply of oil. In fact, according to the American Petroleum Institute, the places where American companies are storing oil are getting few and far between. That is right. America is overflowing with crude oil and is running out of places to store it. This is why it is quite puzzling as to why the United States continues to import oil when it has so much oil domestically.
Of course, the reason for this over-supply is due to shale oil fracking and Canadian tar sands oil. There is just so much petroleum supply in the US and it doesn’t look like this picture is going to change anytime soon. There is, after all, a paradox in North American oil production. The more rigs are shut in and decommissioned, the more oil is produced. That is how efficient oil extraction is in the United States.
Regardless, any effort of trying to export this oil is always going to run into political headwinds. The political question that is going to be asked is why allow exports when the US has to import oil. Maybe the better question to ask is why the US is buying oil from abroad when it has so much oil on its own.
The good news is that oil imports are declining. In 2014, total US demand that was serviced by foreign oil went down by 33% to 27%. In 2005, as much as 60% of US domestic demand was met by imported oil. The good news, if you want to call it that, is that most of the US oil imports actually come from close neighbors Mexico and Canada. This is good news because instead of importing oil from politically unstable regions like the Middle East and certain parts of Africa, the US is less susceptible to supply disruptions because of political stability in Mexico and Canada. Still, due to the huge domestic oil supply, it may be a good idea for the US oil industry to use up local supply first before pushing ahead with its agenda of lobbying congress to allow for US oil exports. Maybe if they did that, they would be more credible.
