“Why does the US import so much oil when they are the world’s largest exporter of it?”

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I keep hearing over and over that the US imports all of its gasoline and raw petroleum that it used, however when you look at the numbers its the greatest exporter of oil ever. Wouldn’t it make more sense for the US to just take some that they produce and keep it to sell to its own consumers.

In: Economics

43 Answers

Anonymous 0 Comments

The big chemical plants that turn crude oil into gasoline take a long time to optimize for a specific type of oil. It turns out that oil from the middle east region is ideal for making gasoline without a lot of extra stuff. So the yield is better and they can get great margins on selling a product that will always sell. Once you tune a chemical plant for that type of oil, you don’t change it. It doesn’t hurt that typically the middle east oil is quite cheap, so the added cost of transporting it isn’t a big factor.

The oil from the US is not well suited to make gasoline. It’s more suitable to use it for other things like plastics or heating oil. So there are chemical plants optimized for those purposes, but again they’re not optimized for using middle east oil to make gasoline.

In short, chemical plants are optimized for specific products and the oil and gas companies select the cheapest raw materials that give them the best overall profit.

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