Punk US Oil Demand and Export Confusion

The US is using spare refining capacity to export millions of barrels of oil products, while US domestic demand remains weak. One of the more common misunderstandings I see in energy circles right now is the idea that US oil demand has rebounded strongly since 2008. It hasn’t. The explanation can be found in the widening divergence between oil that’s imported for domestic usage, and oil that’s imported to convert into oil products for export. Let’s first take a look at the last 15 years of US petroleum consumption. This data  is now updated through October, 2010. | see: US Annual Petroleum Consumption Quadrillion BTU ’95 -’10.

US domestic demand for oil was up a weak 1.1% in 2010, coming off a low, crashy, base in 2009. But worldwide demand for oil especially from developing nations is soaring. The result? The US is using its spare refining capacity to turn oil into products, like diesel–for export. Behold the growth in Total Oil Product exports since the start of 2008. These have nearly doubled from near 1.2 million barrels per day at the start of 2008, to just above 2.2 million barrels per day as of mid-January 2011. | see: US Total Oil Product Exports 2008 -2010 in kb (thousand barrels).

When you hear a newsletter writer, oil analyst, or podcast saying that US domestic oil demand has rebounded strongly since 2008–talking in terms of millions of barrels of restored demand–the mistake they are making is obvious: they are missing the heroic rise in US exports of gasoline, diesel, and distillate. The error comes in part with the myriad measures EIA uses to measure US demand for oil. Hopefully my disentangling of this data here, is of some help.

-Gregor

  • KLR

    ???????????? EIA says Product Supplied is

    “Approximately represents consumption of petroleum products because it measures the disappearance of these products from primary sources, i.e., refineries, natural gas processing plants, blending plants, pipelines, and bulk terminals. In general, product supplied of each product in any given period is computed as follows: field production, plus renewable fuels and oxygenate plant net production, plus refinery and blender net production, plus imports, plus net receipts, plus adjustments, minus stock change, minus refinery and blender net inputs, minus exports.”

  • Anonymous

    Forgive me for thinking out loud, but would it not be great if as part of a coordinated energy policy that we could find alternatives for gasoline powered technology, save enough petroleum for plastics, pharmaceuticals, and other by-products, share the natural gas between our own needs and world demand, and THEN export the rest using what we have. That would indeed be a boost to exports. Yes, that would shift the burden of pollution controls to the developing world, but it would also begin to stem our export deficits and reduce our national debt at some point. If we could just be on the vanguard of the new power technology, we could export THAT to the developing world also to solve that pollution problem.

    That would require two things though:

    1) A commitment to teaching math, science, and engineering for our kids.
    2) A deep restriction to immigration to include those who have science, engineering, math, and technology backgrounds, as opposed to the mass exodus of poor, unprepared people who cannot sustain themselves. That, in and of itself sounds cruel to some, but if the best and brightest kept coming, and we had sane immigration policies, those who would apply would also want to follow that path as well. Productivity can and does eliminate indebtedness, and that tide lifts all boats.

    I still think the USA is capable of solving all of its current problems, it just needs to focus on them and follow through.

  • timl2k10

    Hi. Love your commentary. I like seeing the data broke down this way, but I’m not sure I agree with your interpretation. The US imports petroleum to drive the economy (of course mostly to get form point a to point b), if we are able to use our productive capacity to import oil into something more useful we can then export isn’t that also helping to drive the economy? In that light I guess I see no reason to separate out this type of demand, if the economy is truly benefiting from it, then the need this oil for refining and exporting is not “superfluous” in some way. At any rate, your “disentangling of [the] data” is always appreciated.
    P.S. Am I to interpret your comments regarding your Annual that you will be contributing to gregor.us less?

  • plaiche

    Wouldn’t it be great if nationalism were replaced by rationalism? Wouldn’t it be great if stupid economic cliches about boats that fuel the illusions of greater productivity and endless growth were replaced by awareness that we are overtaxing a finite planet? Wouldn’t it be great if deluded entitled Westerners realized that immigration waves are always more complex than “the poor people came here to suck our resources up” and are far better understood as humans following the resource wealth we in the West have been taking from their lands at gunpoint whilst we impoverish them in far greater numbers?

    Forgive me for thinking out loud.

  • Shan

    This is one of those times when it might be useful to distinguish between “demand” and quantity consumed. The price has risen.

  • hngnhnk

    Forgive me if I’m thinking out loud, but I must wonder why the people of the countries we have bought oil from are still to this day poor. After all we, Americans have dispersed more of our hard earned back breaking wealth across this planet than any other nation.  Surely, our greed for this product that we engineered into fuel, plastics, and God only knows what else, surely those dollars were used to make others lives better.  

    Don’t blame us for sucking up resources and not making the world better for it.  Where you get your gun-toting forced extraction of another countries oil, is worth hearing about in more detail.  Truth is, had the money from oil sales been used for the good of the people in these exporting nations, there would be no need for immigrating to the US. And bet your sweet butt, if most Americans had a choice, we would extract the oil under our ground and tell the rest of the world to kiss off.