Do You Really Know Where Your Gasoline Comes From?
Most people probably think most of the country's gasoline comes from Saudi Arabia or maybe Iraq. Maybe you know about the shale plays in North Dakota or Texas that have also been growing domestic production. But "foreign oil" still accounts for most of the gasoline you use, right? The answer may surprise you.
Most Gasoline Comes From Our Own Backyard
As recently as 2005, 60.3 percent of the oil consumed in the U.S. each year came from foreign suppliers. We were literally dependent on foreign oil to fuel our economy, but that picture has changed rapidly in the last decade.
In 2014, the U.S. imported just 26.5 percent of the net oil it consumed -- and there's now so much oil that there are calls for opening up exports to other countries.
It's no surprise that the driver of the oil boom is shale oil. You can see in the chart below that beginning in about 2009 there was an explosion in oil production in Texas and North Dakota, where shale oil deposits are the largest.
Since the mid-2000s, production of oil in the U.S. has nearly doubled to over 9 million barrels per day. But the U.S. still imports about 5 million barrels of oil per day. So, where does our foreign oil come from?
Would you guess that most of our oil imports come from Canada? The U.S. imports more oil from Canada than it does from Iraq, Kuwait, Qatar, the UAE and Saudi Arabia combined.
And the trend is accelerating. In January 2015, the U.S. imported 122 percent more oil from Canada than from all of the Persian Gulf. In fact, in January Canada supplied 61 percent of net U.S. oil imports, and Canada, Saudi Arabia and Venezuela supplied more than 90 percent of net imports.
Reliance of Foreign Oil Is a Fading Memory
Not only is the U.S. no longer reliant on foreign oil like it once was, but the countries we are reliant on aren't nearly as volatile as suppliers of the past. Canada is about as stable as they come, and Saudi Arabia is a stable leader in the Middle East.
This is a much stronger position than importing oil from countries like Russia, Iran or Syria, a position both Europe and China find themselves facing.
At the very least, it's interesting that 90 percent of the gasoline used in the U.S. today is produced either domestically or in Canada. If the recent trends continue, in the next few years the U.S. may not need Middle East or OPEC oil at all.
The dynamics in the oil markets are changing and they have a bigger impact on where your gasoline comes from than you might think. That's something to consider next time you fill up at the pump.
Travis Hoium is a contributing writer to The Motley Fool. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.