U.S. Energy Imports Trending Down; Exports on Horizon

The Energy Information Administration’s (EIA) “2014 Annual Energy Outlook” projects declines in U.S. oil and natural gas imports as a result of increasing domestic production from tight oil and shale plays. U.S. liquid fuels net imports as a share of consumption is pro­jected to decline from a high of 60% in 2005 and about 40% in 2012 to about 25% by 2016. The U.S. is also forecast to become a net exporter of natural gas by 2018.



Conversely, reports EIA, other major economies are likely to become increasingly reliant on imported liquid fuels and natural gas. China, India, and OECD (Organization for Economic Cooperation and Develop­ment) Europe will each import at least 65% of their oil and 35% of their natural gas by 2020—becoming more like Japan, which relies on imports for more than 95% of its oil and gas consumption. The reasons for these shifts, EIA comments, are different between emerg­ing and developed economies. In China and India, oil demand growth from emergent middle classes will likely outpace domestic production, while OECD Europe will likely become more import-reliant as a result of declin­ing oil production in the North Sea.



EIA forecasts that China will experience the larg­est absolute growth in liquids fuels consumption, grow­ing by about 46% by 2020 and doubling by 2040 from 2010 levels. China will also experience the largest growth in natural gas demand. EIA projects consumption to rise at an average rate of 7.5% a year, while production will grow by an average of 2.4% a year. EIA expects India to have the fastest growth rate in liquid fuels consumption from 2010 to 2020 (3% a year) and the second-largest absolute growth (behind China), primarily driven by diesel fuels used in transportation, irrigation, manufac­turing, and electricity generation. EIA projects India’s natural gas consumption to grow an average of 1.5% annually from 2010 to 2020, while production decreases by an average of 1.1% a year during that time period.



EIA adds that while discussions frequently focus on economies that are net importers of both oil and natural gas, many economies are net exporters of one or both of the fuels. Economies in the Middle East, Russia, and Canada are net exporters of both, with the Middle East and Russia both exporting more than 2.4 times their domestic oil consumption. Less common are countries that are net importers of one fuel and net exporters of the other. OECD Latin America, consisting of Mexico and Chile, is an overall oil exporter but relies on imported natural gas, primarily from U.S. pipelines to Mexico. Brazil will also join this group in the near future when it ramps up production in its offshore oil fields. Finally, Africa as a whole and Australia and New Zealand consume more oil than they produce but export natural gas. Australia’s natural gas export market is projected to increase markedly as planned LNG export terminals come online.