|The imported petroleum bill. Click to enlarge.|
The increase to the estimated $440 billion for 2008 is based on an average $90 per barrel crude oil price for the year. In 2002, before the current bull market for oil began, US oil imports cost less than $103 billion. The preliminary figures for last year came to some $327 billion.
PIW calculates that the US paid out a record $245 billion for about 10 million barrels per day of crude oil imports in 2007, and another $82 billion for about 3.5 million b/d of imported oil products. With US crude production continuing to fall, demand for imports of high-priced transport fuels remaining strong, and oil prices around 30% higher year-on-year so far in 2008, PIW sees the bill continuing to rise.
With oil prices this year as strong or stronger than in 2007, any moderation in the US import bill must come from reduced volumes. While oil demand growth has slowed slightly in recent years due to both high prices and greater fuel efficiency, the higher quality of crude oil imports that US refiners require and the emphasis on high-quality transport fuels in the product import mix are likely to keep upward pressure on import costs even if volumes are stable, according to PIW.
Although “energy security” and “dependency on the Mideast” get the attention in the national debate over oil imports, huge and rapidly rising costs are of greater immediate economic significance, PIW says. Relatively secure supplies from Canada and Mexico account for about one third of crude imports.