A quick look at a timely topic of interest – with a brief review of why it could matter to investors.

Chart of the Week

April 14, 2014

Pump up the volume
US crude oil imports and exports: Mar '04 – Mar '14


Source: Bloomberg, as of 3/31/14. Import data ends 1/31/14, latest available. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.

The Bottom Line:

  • Seemingly overnight, the US has become one of the world's top three oil producers–something that many energy experts thought impossible just a few years ago.
  • The capper: the US is now also the world’s largest producer of natural gas.
  • Two key results of this shift: oil imports have declined dramatically; and there’s a rising call to change current restrictions which limit crude oil and natural gas exports.
  • A key question in the emerging debate about export policy is whether achieving energy independence and becoming a top energy exporter are goals that can co-exist over time.
  • After all, until the US produces more oil and natural gas than it uses, increasing exports will require an offsetting increase in imports to meet domestic demand.
  • However, some believe that allowing more US oil and gas to flow abroad – where prices are generally higher – will stimulate greater investment in US energy, potentially increasing production and lowering global prices in the long run.
  • The flip side is the concern that until that additional supply stream gets going, prices for US consumers would be higher, since a greater share of supply would come from higher-priced energy imports.
  • How the longer-term balance will be struck remains to be seen; but for now, continued growth in domestic oil and gas output appears likely. And that growth will require ongoing investment in energy-related equipment and infrastructure to extract, process and transport domestic production – whether used at home or sold abroad.

The chart:

  • The chart shows the volume of US crude oil imports and exports over the previous decade.
  • Note that the volume of imports of crude oil is measured in millions of barrels per day. US exports are much lower than the volume of imports; as a result, crude oil exports are measured in thousands of barrels per day.

Context & Perspective:

  • The US presently ranks behind Saudi Arabia and Russia in terms of crude oil production, but some forecasts suggest it could surpass them both sometime in 2015.
  • The volume of US oil and gas exports is relatively small because most of America’s energy production is consumed domestically, the result of restrictions on exports–rooted in the oil shocks of the early 1970s.
  • At present, exports of refined crude oil products like gasoline and diesel are permitted, but condensate and unrefined crude are mostly not. The exemptions for some of the oil produced in Alaska–the vast majority of the small amount of these exports–apply to crude shipments to nearby Canada.
  • Natural gas is also subject to restrictions: US exports it to Canada and Mexico via pipeline, but the Department of Energy must grant special approval for any exports to countries that have not signed a free trade agreement with the US. It has only done so once; however, there are 31 requests now pending.
  • Few expect the 40-year ban on crude exports to be lifted anytime soon, but some easing of export restrictions on liquefied natural gas (LNG) could occur sooner, if geopolitics is used as a lever to lift the restrictions. One angle: Ukraine’s dependence on Russian natural gas complicates efforts to strengthen economic ties with the European Union – LNG exports to Ukraine could lessen Russia’s influence in the long run.
  • Of course, increasing exports would require changes to America’s refining structure, which was developed to process imports of heavier international crude–not the lighter West Texas Intermediate crude produced domestically. In addition, expanded export facilities and related equipment will be needed to transport liquefied natural gas in greater quantity abroad.
  • Yet, even if exports do not increase significantly, infrastructure expansion and upgrading will still be needed to handle increasing domestic production.


Condensate comprises petroleum products such as naphtha and other relatively light hydrocarbons which remain liquid at normal temperature and pressure. Recovered mainly from gas reservoirs, condensates are very similar to light stabilized crude oil and are used as feedstock for oil refining and other petrochemical industries.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of Chicago Mercantile Exchange's oil futures contracts.

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Previous Editions

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Go for growth: Where will a global recovery be strongest this year?


Go for growth: Where will a global recovery be strongest this year?

Europe, as countries emerge from bailouts
US, as consumers regain optimism
Japan, as stimulus programs begin to bear fruit
China, as reform and pro-growth policies continue

Previous month Poll

Expect the unexpected:
Which of these outcomes
do you think is the most likely
in the coming year?

US: economic surge spurs Fed to begin raising interest rates
Japan: return to recession despite Abe's continued aggressive stimulus policies
China: negotiate with neighbors over its territorial claims in the South China Sea
Europe: Italy forms a government that lasts the entire year
None of the above; business as usual worldwide