The U.S. is the world’s No. 1 producer of crude oil and refined products.
In fact, U.S. refineries produce more fuel and refined products than they consume. Yet, American refiners and consumers across the country depend on imports of crude oil and refined products like gasoline, diesel and jet fuel, particularly from our North American neighbors. It’s natural to wonder why, especially amid so much trade and tariff news.
Why does the U.S. need imported oil?
- The amount of crude oil U.S. refineries process greatly exceeds U.S. crude oil production. While the U.S. is producing a record amount of crude oil — about 13.4m b/d — U.S. refineries need about 16.5m b/d barrels to maintain current production levels.
- Many U.S. refineries require heavier crude oil than the light variety the U.S. produces in abundance to maximize their output of the most in-demand products: gasoline, diesel and jet fuel. Most crude oil produced in the U.S. is light, including much of what’s produced in the Permian and the Bakken. Light crudes are not good replacements for the heavy crude oil we get from Canada and Mexico.
- Re-tooling refineries to process just U.S. crude oil would cost billions — a risky investment that would take decades to permit, construct and eventually pay off.
- We lack the infrastructure, like pipelines, needed to cost effectively supply U.S. crude oil and refined products to every region. Even if the economics of re-tooling refineries worked, it could take close to a decade to permit and build U.S. pipelines.
Why do U.S. refineries need heavier crudes?
Long before the U.S. shale boom, when global production of light, sweet crude oil was declining, significant investments were made in U.S. refineries to process heavier, higher-sulfur crude oils that were more widely available in the global market. Heavier crude is now an essential feedstock for many U.S. refineries. Replacing heavier crudes with U.S. light, sweet crude oil would make these facilities less efficient and competitive — leading to a decline in fuel production, increased demand for imports of gasoline, diesel and other refined products and higher costs for consumers.
What is the difference between heavy and light crude oils?
There are hundreds of varieties of crude oil around the world. Different types of oil require different refining processes to produce the products needed in the necessary quantities.
Crude oils have different viscosities and gravities. Heavy crude oil is more viscous, while light crude oil is thinner. Crude oils also have different sulfur content. Lowsulfur crude is called sweet and high-sulfur crude is called sour.
Refineries run on a mix of crude oils, which are often blended in order to run efficiently and maximize gasoline, diesel and jet fuel outputs. Nearly 70% of U.S. refining capacity runs most efficiently when processing heavier crudes.
That is why 90% of crude oil imports into the U.S. are heavier than shale crude. Because heavier crude is more difficult to process, it tends to trade at a discount to light crude.
Why are tariffs and taxes on oil imports bad for the U.S.?
Crude oil varieties and refinery configurations are an especially relevant topic amid ongoing U.S. and North American tariff news.
Tariffs and taxes that raise costs or limit the availability of imported crude oil and refined products would increase the cost of producing and supplying gasoline, diesel and jet fuel in the U.S., compromising our energy security.
Most American-made gasoline, diesel and jet fuel stays in the U.S. where it’s used by American consumers and fuels the U.S. economy. Of the total gasoline, diesel and jet fuel that the U.S. exports, Mexico and Canada purchase 43%. And nearly all of what the U.S. exports stays in the Western Hemisphere.
The ability to import and export crude oil and refined products is good for U.S. consumers, manufacturers and overall energy security.
For the latest trends impacting the U.S. refining sector and its role in the global market, be sure to register for the 2025 AFPM Summit, August 25–28 in Grapevine, Texas.
For more information, visit afpm.org.
