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Inside America’s Energy-Export Boom: 10 Key Insights

While the United States is still far from even approaching energy independence, the country appears to be taking a huge step in that direction as 2012 will mark the first time in 62 years that the U.S. has exported more oil-based fuels than it has imported.

A recent article in the Wall Street Journal tells the whole story and features some excellent graphics, but the story inside the story is that these results are not a one-time fluke and instead represent the beginning of a new age in which American technology and entrepreneurship are overcoming some lingering obstacles and creating big opportunities in global markets.

While the U.S. continues to import huge volumes of oil, the country has become a significant global player in the export of petroleum-based products such as diesel, heating oil, gasoline, and kerosene.

Beyond the business innovation that has led to this export boom, the primary long-term issue for the U.S. is what type of energy policy the federal government will adopt: will the current stance of increasingly tight regulation and limited access to energy reserves continue, or will U.S. energy companies be given greater latitude to pursue the massive reserves or fossil fuels that the country possesses?

However that turns out, the excellent oil and gas companies in the U.S. energy industry have created exciting new opportunities by creating and exporting higher-quality products and adapting to rapidly changing market dynamics. From the Wall Street Journal article, here are 10 key insights into how the U.S. energy industry has achieved these breakthroughs:

1) “Also adding to the U.S. exporting firepower: Refineries are more efficient, giving them an edge over older facilities in Europe,” the article says. “New drilling methods are boosting U.S. oil production, helping ensure steady supplies of raw material for refiners to process.”

2) The slumping U.S. economy has suppressed domestic demand while strong activity in emerging markets has more than compensated.

3) The last time the U.S. exported more oil-based products than it imported was in 1949, according to Liam Pleven of Markets Hub.

4) America “sent abroad 753.4 million barrels of everything from gasoline to jet fuel in the first nine months of this year, while it imported 689.4 million barrels,” according to the U.S. Energy Information Administration.

5) Just six years ago, the balance was tipped heavily in favor of imports as imports of petroleum products exceeded exports by 900 million barrels in 2005.

6) The export boom marks the beginning of a “transformation of the energy system,” says Citigroup Inc.’s global head of commodity research Ed Morse in the article. “It’s the beginning signs of a process that will continue for the next decade and will point toward energy independence.”

7) The leading importers of U.S. oil-based products were Mexico, Brazil, Netherlands, and Singapore.

8) The import-export balance with Brazil and its booming economy has been turned upside-down: five years go, the U.S. was a net importer from Brazil, but last year exports to Brazil exceeded imports by almost 40 million barrels.

9) North Dakota’s booming oil production has given the U.S. more crude to work with: “North Dakota’s oil production of 424,000 barrels per day in July was up 86% over the same period in 2009,” the article says.

10) Drivers in the U.S. are consuming less gasoline this year than in some recent years.

Forbes, 4 December 2011