The United States has been exporting crude oil for less than a year and a half after the four-decade ban on exports was lifted, but already buyers are lining up to tap this new, stable supply. Canada has bought up most of this crude to date, but China just surpassed our northern neighbor to become the biggest buyer of American crude in February. The FT reports:
To date, Canada has taken about half of the 239m barrels exported since the US ban was lifted, while China bought only 7 per cent, according to US census bureau data. But recent pipeline upgrades, and the surge in shale oil and gas production since the 2000s, has created ample supply and pushed output from Texas and Oklahoma into the Gulf Coast, depressing prices enough to justify the shipping cost to Asia. […]
Exports have begun flowing even as China goes head-to-head with the US as the world’s top oil importer. Within the next three to five years China is expected to become the world’s largest oil-refining nation, surpassing the US.
China has eyes on becoming the world’s biggest refiner of crude oil, and it knows that the United States is a much more reliable supplier than the Middle East. Lin Boqiang, dean of the China Institute for Energy Studies at Xiamen University, admitted as much to the FT, saying that “the Middle East is very risky, so we need to diversify, to look at all continents.”
This is an opportunity for the United States to help address its lopsided trade balance with China. The U.S. remains a net energy importer and will for the foreseeable future, but in our bilateral trade relations with China, the shale boom can help us nudge the scales back to a more equitable position.