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An aerial view of the Pasadena Refining System, Inc., in Pasadena, Texas, from 2017.
Why does the US Import oil despite producing enough for its needs?
The United States is one of the world’s largest oil producers, producing enough crude oil for domestic consumption and exporting millions of barrels daily. In 2023, it exported just over 10 million barrels per day, or b/d, of petroleum to 173 countries and three US territories.
Yet, the US also imports roughly 8 million b/d, mostly heavy crude,60% of which comes from Canada, up from 33% in 2013. US oil refining capacity stood at 18.4 million barrels per day (b/d) as of Jan. 1, 2024. This may seem counterintuitive, but there are several reasons why the US still relies on imports.
Oil quality differences. Crude oil comes in different grades, generally categorized by density (light vs. heavy) and sulfur content (sweet vs. sour). The US primarily produces light, sweet crude, ideal for gasoline. But many US refineries, especially those along the Gulf Coast, are geared up to process sour, heavy crude – the kind produced in countries like Canada and Venezuela. Heavy crude oil is cheaper, and its chemical composition allows it to be used in a greater variety of products, such as diesel, jet fuel, and petrochemicals.
Geographic logistics and costs. US oil fields are concentrated in Texas and North Dakota, making it cost-effective for other regions to import oil from Canada, whose pipeline infrastructure can directly supply US refineries in the Midwest and Gulf Coast. Canada also supplies oil by rail, as its supply exceeds pipeline capacity. Its oil is also sold at a discount, as high as $20 a barrel in the last two years, due to its limited pipeline infrastructure to coastal ports that makes the US its chief customer, as well as competition from increased production of Mexican crude that has saturated the market.
Economics and trade. US producers sell their light crude to international markets, where they can fetch higher prices than domestically. From 1975 to 2015, it was illegal for the US to export crude oil. President Barack Obama lifted the ban as other sources of oil including hydraulic fracking became available, increasing domestic supply. The US Energy Information Administration forecasts that US crude oil production will continue to rise, reaching an average of 13.5 million b/d in 2025, up from a record 13.2 million b/d in 2024.
Energy security strategy. The US has long maintained a policy of diversifying oil sources to ensure energy security, particularly since the 1973 oil embargo by OPEC countries during the Arab-Israeli war, preferring imports from more stable trading partners like Canada. President Donald Trump’s declaration of a national energy emergency on Monday, however, is designed to boost US oil and gas production by expediting drilling permits and removing restrictions on exploration, including offshore and in Alaska. This might make it less necessary to import Canadian oil – an issue of concern to Alberta, whose economy relies heavily on exports to the US. Tariffs on Canadian oil would also make the product more expensive and encourage greater production of US oil, which could also reduce reliance on Canada in the long term.
File Photo: South Sudan's President Salva Kiir Mayardit attends the Intergovernmental Authority on Development (IGAD) 42nd Extraordinary Session, at the State House in Entebbe, Uganda January 18, 2024.
As oil stops flowing, South Sudan risks crisis
South Sudan’s main oil export pipeline has been caught in the crossfire of the brutal civil war ripping across its northern neighbor, threatening the country’s economy and power structure. The fighting means engineers can’t access the pipeline to repair damage, so South Sudan declared “force majeure” earlier this month, essentially absolving it of certain contractual obligations.
South Sudan is the least developed country in the world after Somalia, according to the UN’s Human Development Index, and some 90% of the country’s revenue comes from oil exports. Between two thirds and three quarters of its exports pass through Sudan, from which South Sudan broke away in 2011.
But very little of that revenue benefits ordinary citizens, as it is largely directed into “special projects” overseen by President Salva Kiir, who has been accused of corruptly diverting the funds. Experts told Al-Jazeera that Kiir uses the funds to pay off a tiny elite, who in turn keep him in power.
With the oil taps shut for the foreseeable future, South Sudan will likely face a currency depreciation, worsening the already grim economic situation. Without money to pay off elites, Kiir could also face a power struggle, particularly with (admittedly dubious) elections expected in December. Juba may not even have the cash to hold sham contests, which could spark unrest.