The resurgence of US oil production has been one of the top economic stories of the 21st Century.Now the resurgence of US oil exports is coming to the fore as it overtakes Canada as the world’s fourth-largest exporter. And it’s all happened in less than eight years — the US only lifted its crude oil export ban in 2015. Since the 1970s the only US exports were Canadian barrels reimported on the Enbridge line through Michigan.According the US government’s Energy Information Administration (EIA) — not to be confused with the Paris-based International Energy Agency — the US exported a record 3.99 million barrels per day (bpd) in the first half of the year, up more than 20% from this time last year.In August alone, the Lower 48 sent out USD$10.3 billion worth of crude, accounting for 6% of all its trade. That was followed closely by gasoline and refined products, which added another $9.72 billion or 5.7% to the total. Exports of LNG and natural gas came in at $4.98 billion or nearly 3%.In other words, energy now accounts for about 15% or $25 billion a month to America’s balance of trade that wasn’t there prior to 2015. .In other words, energy now accounts for about 15% or $25 billion a month to America’s balance of trade that wasn’t there prior to 2015. Bureau of US Trade.In fact, oil is now poised to become the country’s single largest export product for the first time in its history even as Canada struggles to get its first barrel to tidewater on the nearly-complete TransMountain expansion to Burnaby.By contrast Canada exported about 3.4 million bpd — almost all of it to the US — worth about CAD$10.78 billion according to the latest StatsCan numbers..That situation has allowed US producers to export higher-value light sweet grades that fetch premium prices while importing cheaper, land locked Canadian crudes at a significant discount. A back of napkin calculation pegs that arbitrage at around $2 billion per month.That advantage has had implications for the global oil market. Unlike Canadian barrels, which are funnelled mainly to a half dozen refineries in the US midwest, American crudes are making their way around the globe even as Canada struggles to get its first shipment to tidewater in the first quarter of next year.Europe was the top destination for US exports, amounting to 1.75 million bpd, while Asia sucked up another 1.68 million bpd. American oil has become so prolific its signature West Texas Intermediate (WTI) from Midland in June was included in international benchmarks such as UK Brent..“One of the challenges we have faced here for some time now is a bit of unpredictability and uncertainty, which then quite frankly scares away capital.”Suncor CEO Rich Kruger.It serves as both a reminder of the potential global opportunity for Canada’s energy sector and a cautionary tale while this country struggles with energy policy in a climate constrained world.And in fact, Suncor CEO Rich Kruger warned a parliamentary committee on Monday Ottawa’s unpredictable energy policies are driving away investment in Canada’s resource sector, not just oil and gas.“If the hurdle is set at a certain height, that’s fine. We just want to know it’s not a moving target,” Kruger told lawmakers in Ottawa. “One of the challenges we have faced here for some time now is a bit of unpredictability and uncertainty, which then quite frankly scares away capital.”
The resurgence of US oil production has been one of the top economic stories of the 21st Century.Now the resurgence of US oil exports is coming to the fore as it overtakes Canada as the world’s fourth-largest exporter. And it’s all happened in less than eight years — the US only lifted its crude oil export ban in 2015. Since the 1970s the only US exports were Canadian barrels reimported on the Enbridge line through Michigan.According the US government’s Energy Information Administration (EIA) — not to be confused with the Paris-based International Energy Agency — the US exported a record 3.99 million barrels per day (bpd) in the first half of the year, up more than 20% from this time last year.In August alone, the Lower 48 sent out USD$10.3 billion worth of crude, accounting for 6% of all its trade. That was followed closely by gasoline and refined products, which added another $9.72 billion or 5.7% to the total. Exports of LNG and natural gas came in at $4.98 billion or nearly 3%.In other words, energy now accounts for about 15% or $25 billion a month to America’s balance of trade that wasn’t there prior to 2015. .In other words, energy now accounts for about 15% or $25 billion a month to America’s balance of trade that wasn’t there prior to 2015. Bureau of US Trade.In fact, oil is now poised to become the country’s single largest export product for the first time in its history even as Canada struggles to get its first barrel to tidewater on the nearly-complete TransMountain expansion to Burnaby.By contrast Canada exported about 3.4 million bpd — almost all of it to the US — worth about CAD$10.78 billion according to the latest StatsCan numbers..That situation has allowed US producers to export higher-value light sweet grades that fetch premium prices while importing cheaper, land locked Canadian crudes at a significant discount. A back of napkin calculation pegs that arbitrage at around $2 billion per month.That advantage has had implications for the global oil market. Unlike Canadian barrels, which are funnelled mainly to a half dozen refineries in the US midwest, American crudes are making their way around the globe even as Canada struggles to get its first shipment to tidewater in the first quarter of next year.Europe was the top destination for US exports, amounting to 1.75 million bpd, while Asia sucked up another 1.68 million bpd. American oil has become so prolific its signature West Texas Intermediate (WTI) from Midland in June was included in international benchmarks such as UK Brent..“One of the challenges we have faced here for some time now is a bit of unpredictability and uncertainty, which then quite frankly scares away capital.”Suncor CEO Rich Kruger.It serves as both a reminder of the potential global opportunity for Canada’s energy sector and a cautionary tale while this country struggles with energy policy in a climate constrained world.And in fact, Suncor CEO Rich Kruger warned a parliamentary committee on Monday Ottawa’s unpredictable energy policies are driving away investment in Canada’s resource sector, not just oil and gas.“If the hurdle is set at a certain height, that’s fine. We just want to know it’s not a moving target,” Kruger told lawmakers in Ottawa. “One of the challenges we have faced here for some time now is a bit of unpredictability and uncertainty, which then quite frankly scares away capital.”
