The United States has about one-fifth of the world’s oil refining capacity, according to World Trade Organization (WTO) data.
There, the industry expanded thanks to the boom in shale oil production when crude oil exports were subject to licensing, and were effectively banned, while refined products could be exported more easily.
Crude oil is produced in 32 states and in U.S. coastal waters, mainly in the Gulf of Mexico.
Most of the incentives for oil (and gas) production are granted in the form of tax breaks for producing companies, and petroleum products are subject to (relatively) soft taxes.
At the same time, low-permeability (shale) oil production is price sensitive, and the boom in this industry subsided in 2015-2016 in the wake of price moderation, although it picked up again due to tightening markets.
In mid-2018, the United States became the world’s largest crude oil producer, after first overtaking the Kingdom of Saudi Arabia (in February 2018) and then the Russian Federation (in July 2018).
Then, U.S. production continued to grow during 2019 and into the first months of 2020.
Oil refining
The Covid-19 pandemic, which had a strong impact on global demand and prices, led to a drop in oil production in the United States that continued until 2021.
As such, exploration and production companies cut capital expenditures and focused on completing well construction rather than drilling new wells.
U.S. production, which is rising again, could average about 12 million barrels per day (b/d) in 2022, but will still remain below the November 2019 level (13 million b/d).
In 2015, the 40-year ban on crude oil exports was lifted.
Due to high domestic demand, the United States is a net importer of certain petroleum products.
According to the WTO, the U.S. Strategic Petroleum Reserve consists of four zones with deep subway storage tanks with a total capacity of up to 727 million barrels of crude oil.
Between fiscal years 2017 and 2020, about 60 million barrels of oil were sold from the Reserve.
However, by the end of 2021, its stockpile amounted to 593.7 million barrels of crude oil.
Current legislation will allow about 310 million barrels from the Reserve to be used by 2031.
