Energy security remains an enduring concern, a reminder of which was provided by the September 2019 attacks on two key Saudi Arabian oil installations. While the expansion of U.S. petroleum production in recent years has been widely touted, we still import more than 200 million barrels of oil every month, highlighting the continuing linkage between the world oil market and the U.S. market.
In 2019, the U.S. still sent an estimated $35 billion to OPEC countries for oil—$275 per American household— including $12 billion to Saudi Arabia alone. In fact, California, the largest gasoline-consuming state, has been importing increasing quantities of crude oil, more than two-thirds of which come from OPEC.
On the other hand, homegrown ethanol is a secure source of transportation fuel that has helped the nation limit its oil imports and thus its susceptibility to developments in the world market. According to a recent study by energy economist Dr. Philip K. Verleger, Jr. that looked at oil market shocks starting with the 1973 Arab Oil Embargo, even “a modest amount of renewable fuels can significantly moderate the price impact of market disruptions.”
In 2019, U.S. dependence on imported crude oil and petroleum products fell to just 4 percent on a net basis (i.e., imports minus exports), due to the increase in domestic production of both crude oil and biofuels. Yet, without the inclusion of ethanol in the domestic fuel supply, the U.S. would have been dependent on imports for 10 percent of its needs.
The use of ethanol specifically reduced the need for crude oil imports by 514 million barrels. More broadly, the 15.8 billion gallons of ethanol produced for the domestic and export markets displaced 559 million barrels of crude oil.