With the booming domestic energy industry fueling projections that the United States could be energy independent as early as 2030, the nation should be importing less not more oil, right?
But that wasn't the case in January, according to a Bureau of Economic Analysis report released Thursday—U.S. imports of crude oil spiked 17 percent to 8.41 million barrels, the most since August 2012.
Oil imports contributed heavily to the widening trade deficit reported in January, accounting for most of the $6.3 billion increase that brought the total deficit to more than $44 billion. If not for crude oil imports, the trade deficit would have remained relatively flat, according to Bloomberg.
But while January's numbers might be counterintuitive given recent newfound abundance of domestic oil and gas resources, Thursday's BEA report is also somewhat misleading according to experts, many of whom aren't surprised imports surged in January.
Refiners tend to dial back imports later in the year to reduce their inventories and avoid big tax bills, according to Allen Gilmer, CEO and chairman of Drilling Info, an oil and gas business intelligence technology firm. Then in the early months of the year, they increase imports to resupply, which is why the U.S. saw such a big jump.
Tom Kloza, chief oil analyst at the Oil Price Information Service, agrees the spike in January is temporary and not evidence of a shift away from the longer-term trend of waning oil imports.
"There's no question the trend is lower imports of crude and lower imports of refined product," Kloza says, adding that domestic production of oil continues to climb despite the recent uptick in imports. "We're producing [more than] 7 million barrels a day. The only question is when will U.S. production of crude be more than U.S. imports of crude, and I think we'll see that this year."
It could be sooner than many expect. According to Bloomberg, the U.S. came within 200,000 barrels of producing more oil than it imported during the week of Feb. 24 - March 2.
Increased imports of crude oil in January come amid debate heating up over TransCanada Corporation's Keystone XL pipeline, which cleared another hurdle in its approval process after the State Department determined the project would not significantly increase greenhouse gas emissions.
The northern leg of the Keystone XL would bring crude oil from the oil sands region of Alberta, Canada to the Gulf Coast for refining and export. But according to Kloza, building the pipeline wouldn't dramatically impact the existing crude oil supply and demand dynamic in the United States.
"I don't think it means too much because we're already railing crude oil out of Canada to all sorts of different destinations in the U.S. right now," he says.
In addition, if the pipeline is built, crude oil from Canada won't be solely shipped down to the Gulf Coast for export to markets such as China as some critics have argued, but will likely substitute some of the oil that comes from Iraq and other Middle Eastern countries.
"Maybe 12 years down the road all that Canadian crude can move through the U.S. and get exported if we're all driving hydrogen cars or flying cars, but Keystone is just not that big of a deal in terms of supply of demand," Kloza says.