President Donald Trump said this week that the U.S. does not require oil from the Middle East. He said, “We are now the number one producer of oil and natural gas anywhere in the world,” Trump said in remarks today. “We are independent and we do not need Middle East oil.”

I never imagined a President of the United States making this claim. In fact, in the last three decades since the Arab Oil Embargo had us rationing gasoline and diesel, each President would send his top Administration officials to Saudi Arabia to beg for help keeping American oil prices down so as not to hurt our economy. A lot of crow was eaten!

Is this President right about his statement? The bottom line is that the EIA now projects that U.S. oil consumption will be 20 million barrels a day in 2020 and U.S. crude oil and other liquids production will reach an annual average of 19.6 million barrels per day (b/d), the highest level on record. EIA also expects U.S. crude oil production alone will average 12.3 million b/d in 2019, making the United States the largest crude oil producer in the world.

So, U.S. oil production has dramatically increased over the past decades and the U.S. now exports more crude oil, natural gas liquids and refined products than it imports. Another exciting result of this new found abundance is throughout 2019, increases in U.S. petroleum production put downward pressure on crude oil prices for consumers. In addition, the production increases likely limited the effect on prices from the attack on Saudi Arabia, production cut announcements from the Organization of the Petroleum Exporting Countries (OPEC), and U.S. sanctions on Iran and Venezuela that limited crude oil exports from those countries.

Outside the United States, crude oil production from major producers such as Saudi Arabia, Venezuela, and Iran declined in 2019. EIA expects that total OPEC crude oil production averaged 29.8 million b/d in 2019, a decline from the 2018 average of 32.0 million b/d. U.S. crude oil imports from OPEC countries were at their lowest level in several decades. To continue limiting excess crude oil supply, on December 7, 2019, OPEC+ (OPEC plus 10 other nations such as Russia, Mexico, and Kazakhstan) announced they were deepening the production cuts originally announced in December 2018.

Late last year, EIA said U.S. crude oil and petroleum product net imports will average 490,000 b/d in 2019, down from 2.3 million b/d in 2018. In September and October, the United States exported more petroleum (crude oil and products) than it imported for the first time on record, based on monthly values since 1973 and annual data collected starting in 1945. EIA expects total crude oil and petroleum net exports to average 570,000 b/d in 2020 compared with average net imports of 490,000 b/d in 2019.

Well, those are the facts. But is the President correct that we don’t need oil from the Middle East? The answer is yes and no. American refineries tend to be built to use certain grades of oil, and the older ones are the ones that depend on the heavier, sour grades of crude oil that tend to be imported and less valuable, while the newer refineries or ones upgraded to utilize the new American supplies of the lighter sweet grades of crude that are more valuable that are produced now from American shale oil formations.

Part of the reason the energy industry wanted to eliminate the ban on American crude oil exports, is that they wanted to maximize the value proposition of each type of oil. By that I mean they can sell their sweet crude to refineries built to utilize that oil here in the United States but also to export it to other such refineries around the world, so they aren’t forced to sell at a discount to refineries built to utilize the cheaper sour crude oil. Exports from Canada, Mexico and the Middle East tend to be sour crude and so it is really about a global balance of sending the grade of crude oil where its value is maximized.

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