Oil boomlet sweeps U.S. as exports and production rise

— -- Looking at your heating bills or gas prices, you may find it surprising that the United States is enjoying a mini oil boom. It's producing more crude oil and, for the first time in decades, has become a net exporter of petroleum products such as jet fuel, heating oil and gasoline.

The U.S. exported more oil-based fuels than it imported in the first nine months of this year, making it likely that 2011 will be the first time since 1949 that the nation is a net exporter of such goods, primarily diesel.

That's not all. The U.S. has reversed another decades-long trend. It began producing more crude oil in 2008 than the year before and accelerated that upswing 3% in the first nine months of this year compared with the same period in 2010. That production has helped reduce U.S. imports of crude oil by about 10% since 2006.

"It's dramatic. It's transformative," Edward Morse, a former senior U.S. energy official who now directs global commodities research at Citigroup, says of the historic shifts. He says the U.S. is importing a smaller share — 49% in 2010, down from 60% in 2005 — of the oil it uses, adding: "We're moving toward energy independence."

He says the U.S. economy benefits, because its low natural gas prices help make its steel and other manufacturing industries more competitive. He says U.S. consumers benefit with more jobs and gasoline prices that are lower and less volatile than in many countries.

Not all are cheering. The changes are exacting a brutal toll on the nation's health and environment, says Susan Casey-Lefkowitz of the Natural Resources Defense Council (NRDC), citing the greenhouse gas emissions of producing and refining fossil fuels.

The U.S., the world's second-largest greenhouse gas emitter after China, produced 4% more carbon dioxide last year than in 2009, when emissions dipped because of the recession, according to the Global Carbon Project, an international group of scientists.

American consumers benefit little from the U.S. oil boomlet, because their fuel prices depend heavily on a global oil market that remains tight and has probably already peaked in production, says Jeremy Rifkin, author of The Third Industrial Revolution: How Lateral Power is Transforming Energy, the Economy and the World.

Perhaps the bigger impact is on American foreign policy. The U.S. oil boomlet has amplified concurrent shifts in the global oil market. Today, half of net U.S. petroleum imports come from the Western Hemisphere, and half of that (or a quarter of the total) comes from Canada. Only 12% came from Saudi Arabia last year, down from nearly 19% in 1993.

"What's occurring is a rebalancing of the world oil supply," says Daniel Yergin, energy historian and author of The Quest: Energy, Security, and the Remaking of the Modern World. He says Brazil's newly produced offshore oil, which he calls "presalt" because it's beneath a thick layer of salt, will further tip the scales.

"The importance of the Middle East has decreased for us," says Michael Klare, author of the forthcoming The Race for What's Left: The Global Scramble for the World's Last Resources. "That's a dramatic change in the geopolitical equation."

Why the U.S. shifts?

What's driving the boomlet is increased production of two resources that previously weren't considered economically viable to develop.