The US is the largest producer of oil in the world – so why do we still need to import oil and ask countries like Saudi Arabia for help?
Oil prices are high, energy concerns are roiling the global economy, and the cost of filling a gas tank is causing one of the biggest economic shocks in US history.

Unfortunately for American drivers, this is familiar territory in a country that is both the world’s largest oil producer and one of the largest oil importers on the planet.

Gas prices are starting to drop, bringing some relief to the dead summer travel season. But those prices are still hovering around $4.40 per gallon nationally. With President Biden’s failure to get an increase in production from Saudi Arabia — along with a criticized decision to send 5 million barrels of supplies to Europe and Asia — attention has once again turned to America’s frustrating oil export/import paradox.

At $75 or more per tank, it can be frustrating to watch domestic crude leave US ports faster than foreign crude. However, this is a decades-long challenge and only the nature of the crisis has changed.

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Leading from behind
The United States is the world’s leading producer of petroleum (including crude oil, other petroleum liquids, and biofuels) and as of 2018. According to the U.S. Energy Information Agency, it’s not even close. The EIA reports that by 2021, the U.S. it produced 18.88 million barrels a day—about 10 million a day more than nothing. 2 Saudi Arabia (10.84 million) and no. 3 Russia (10.78 million).

The EIA also noted that the US is the largest consumer of oil at 20.54 million barrels per day, accounting for 20% of global supply, in the first place. 2 China (14.01 million). The United States. imported 7.86 million barrels of oil a day last year, the EIA report showed.
So if America is producing nearly as much oil as it imports and interest in renewable energy sources is growing, isn’t it true that the US is less dependent on foreign oil and that worries about energy prices should disappear because US stocks are more than enough?

Not even close.

Oil prices and politics
The reasons for the import/export difference are really simple. Chief among them:

Foreign oil is cheaper: Production costs are usually lower in other countries. Rystad Energy, a private energy research company, found in a 2020 analysis that oil fields in the Middle East have the lowest production costs in the world at $31 per barrel. In the United States. oil from deep wells is at $43 a barrel, while oil produced by fracking costs $44 a barrel.

Energy as a weapon: Prices are often linked to how countries perceive the environmental, economic, and geopolitical impact of their oil.

Some concerns are more pressing than others. Russia, for example, is widely seen as using oil as a tool to extract concessions in its invasion of Ukraine. The Russian invasion eventually prompted President Biden to sign a ban on Russian oil imports, but it’s unclear how much of a ban Vladimir Putin’s ban will be. Europe now faces new uncertainty over access to critical Russian oil for the winter.

Not all oil is created equal: This is a major challenge for the US, where most of the country’s refining capacity is built to handle heavy, hard-to-refine crude imported from the Middle East and elsewhere. This US capacity is not aimed at refining the kind of light, sweet crude that characterizes flooded oil fields in Oklahoma, Texas, and elsewhere.

A shift in U.S. refining capacity to lighter crude could cause unprecedented market upheaval and damage major investments, the American Petroleum Institute said. Attempts to correct this discrepancy are almost always stalled, often due to environmental protests or other political realities. Most believe the current situation will not change until new refining capacity is brought online or the current capacity is upgraded to handle what the US is producing. The cost of such a transfer can be enormous.

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