The U.S. is exporting the most crude in 15 years. Why is Canada buying almost all of it?

Chart showing U.S. crude oil exports from 1999 to present

Buried in statistics released by the Energy Information Administration this week indicating the United States is exporting more crude oil than it has in 15 years is a still more startling fact: “Almost all of the crude oil exported from the United States has been delivered to Canada.”

But wait, you’re saying. Isn’t Canada the largest supplier of crude oil to the U.S.? And doesn’t the U.S. have a legislated ban on crude oil exports? True on both counts.

As for Canada-U.S. trade flows, you have to remember that countries don’t trade, exactly; companies buy and sell stuff. Eastern Canadian refineries geared to light grades are buying more cheap crude from North Dakota and Texas in  place of costly crude they were previously buying from Algeria and the U.K. (How do you suppose those rail cars ended up in Lac Megantic?) Heavy oil producers in northern Alberta are likewise buying light diluent from the U.S. to dilute their own product for easier pipeline shipment back to the U.S.

As for the export ban, it has a number of exemptions, including “temporary exports or exchanges” and “exports to Canada for consumption or use therein.” Exports reached 286,000 barrels a day in April, still a drop in the bucket compared to the 18 million or so consumed in the U.S. every day (or the 2.8 million imported from Canada), but up about fivefold since 2012. And with supplies from Iraq threatened with disruption—in recent years, Iraq was the only major producer increasing its output faster than the U.S. and Canada—that American oil is only going to get more competitive in the marketplace.