U.S. Projected to Decrease Foreign Oil Dependence

On Monday, the U.S. Energy Information Administration released the Annual Energy Outlook 2012 Early Release.  This report provides projections for the U.S. energy markets under the assumption that current energy laws and regulations stay fairly unchanged.  This information can be used to discuss the current state and trends of the energy market for the ultimate goal of analyzing and identifying necessary changes in energy policies, rules, and regulations moving forward.

The AEO report presented a projected decrease in dependence on foreign oil in the United States.  Figure 1 from the AEO is shown below and illustrates the anticipated closing gap between U.S. fuel consumption and domestic fuel supply.  At its peak in 2005, 60% of fuel consumed in the U.S. was imported.  This percentage decreased to 49% in 2010, and the EIA believes this trend will continue until 2035 when foreign fuel will constitute only 36% of fuel consumed in the United States.  This trend is due to increased domestic fuel supply from growth in domestic oil production as well as limited increases in consumption due to increased use of biofuels, moderate growth in the transportation industry’s demands, and higher fuel economy standards in vehicles.

U.S. is Now a Net Exporter of Oil

Bloomberg reports that the U.S. now exports more oil products than it imports.  During 2011, America’s exports of gasoline, diesel fuel, and other products exceeded imports of those products by an average of 439,000 barrels each day.  The last time America was a net exporter of oil was in 1949, and 2011 marks the first year in which crude oil output rose above 2 billion barrels.  In its analysis of the oil sector, Citigroup Inc. proclaims North America as “the new Middle East” with regards to energy production this decade. Citigroup points to increased oil production in Canada and Mexico as the basis for this claim, and they additionally believe this jump in production will be sustainable in the coming years.