-October 19,2023-
Data source: U.S. Energy Information Administration, Petroleum Supply Monthly
Exports help oil companies but not US motorists
U.S. crude oil exports in the first half of 2023 averaged 3.99 million barrels per day (b/d), which is a record high for the first half of a year since 2015, when the U.S. ban on most crude oil exports from the United States was repealed. In the first half of 2023, crude oil exports were up 650,000 b/d (19%) compared with the first half of 2022.
Europe was the largest regional destination for U.S. crude oil exports by volume, at 1.75 million b/d, led by exports to the Netherlands and UK. Asia was the regional destination with the next-highest volume, at 1.68 million b/d, led by exports to China and South Korea. The United States also exported significantly smaller volumes of crude oil to Canada, Africa, and Central America and South America.
Although exports increased in the first half of 2023, the United States still imports more crude oil than it exports, meaning it remains a net crude oil importer. The United States continues to import crude oil despite rising domestic crude oil production in part because many U.S. refineries are configured to process heavy, sour crude oil (with a low API gravity and high sulfur content) rather than the light, sweet crude oil (with a high API gravity and low sulfur content) typically produced in the United States.
U.S. crude oil imports come primarily from historical trading partners such as Mexico and Canada. Heavy, sour grades of crude oil are often discounted compared with light, sweet grades of crude oil because they require more complex refinery units to produce profitable yields of refined products such as motor gasoline, diesel, and jet fuel. Most U.S. crude oil imports take place when it is more profitable for U.S. refiners to process discounted heavier grades because those refineries have already invested in the additional complexity required to refine them.
Lower fertilizer costs helping farms break even
Commodity prices are forecast to fall in 2024 but so will crop production expenses, said agricultural economist Michael Langemeier of Purdue University. “Moderation in input prices, particularly fertilizer prices, is likely to result in lower breakeven prices in 2024.”
Farm production expenses were forecast by the USDA at a record $458 billion this year, up nearly 7% from 2022, when expenses surged by 15%. Fertilizer and fuel costs soared in 2022 and were a sore point in farm country. Fuel prices would decline and fertilizer prices would hold steady this year, according to an August USDA estimate.
To offset high production costs, farm groups have called for higher reference prices, which would make crop subsidy payments more likely in the new farm bill. A 10% increase in reference prices could boost crop subsidies by $20 billion, according to one analyst. Lawmakers have not agreed on how to offset the expense and stay within spending limits. The farm bill is on the legislative back burner while the House selects a new speaker and Congress works on government funding bills.
“Breakeven prices for corn and soybeans are expected to decline from 5 to 10% in 2024 after increasing sharply in 2022 and 2023,” wrote Langemeier, after comparing changes in farm input costs with the overall U.S. inflation rate. Fertilizer, diesel fuel, and ag chemical prices have fallen steeply in the past year — nearly 50% for anhydrous ammonia, a nitrogen fertilizer.