The United States is on track to become a net exporter of petroleum for the first time since at least 1949, with additional trade deficit gains expected.

According to a new report by business information provider, IHS Markit, the boom in U.S oil and gas production over the past decade has exerted a moderate force on what is a large domestic merchandise trade deficit by helping reduce the country’s net petroleum imports.

The report found that the total U.S. merchandise trade deficit in 2017 was nearly $250 billion lower than it otherwise would have been if the petroleum trade deficit remained at its 2007 level. IHS Markit forecasts that the U.S. petroleum trade balance will further improve by approximately $50 billion between 2017 and 2022.

‘Trading Places: How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check’  was designed to examine the impact of rising U.S. oil, natural gas and chemical production on the domestic trade merchandise balance, along with how the energy and chemicals may evolve in the U.S. in coming years.

IHS Markit Vice Chairman, Daniel Yergin, explained that the improved U.S. trade position in petroleum has been a counterbalancing force helping to keep the U.S. trade deficit in check over the past decade.

“The resurgence of domestic oil and gas production has flipped the trade position of several products along the energy value chain on their heads, while that of other products, such as crude oil, have been significantly reduced,” he said.

The report stated that U.S. production of liquids (crude oil and natural gas liquids) nearly doubled from about 7 million barrels a day (mbd) in 2007 to 13 mbd in 2017 and 14.8 mbd in the first nine months of 2018.

Crude oil alone also rose from 5 mbd in 2007 to 9.4 mbd in 2017, averaging 10.6 mbd in the first nine months of 2018 and reached 11.2 mbd in October 2018.

This rise, combined with a slight decline in domestic demand, contributed to a sharp fall in U.S. petroleum net imports as a share of total consumption – from a high of 60 per cent in 2005 to 19 per cent in 2017 and 14 per cent in the nine months of 2018.

The report stated that the continued growth of U.S. crude oil and natural gas liquids (NGL) production, in addition to relatively flat liquids demand, are expected to make the U.S. a net-petroleum exporter by early next decade. This would be the first time that U.S. is not a net petroleum importer since at least 1949.

Senior Vice President and Division Head for Energy and Chemicals at IHS Markit, David Witte, also commented that the U.S. moving from net imports to being a net petroleum exporter would be a historic shift, something not achieved since at least the Truman administration.

“It speaks to the profound and continued impact that the U.S. shale boom has had in terms of investment, job creation, manufacturing, GDP and now trade,” Mr Witte said.

Lastly, the report highlights that the resurgence of U.S. oil and gas production has already altered the domestic net trade position of a number of energy products over the same 2007-2017 period.

IHS Markit expects exports of these products to continue to rise. They include:

• Refined products: from about 1 mbd of net imports in 2007 to about 2 mbd net exports in 2017 – a positive change of about 3 mbd
• Natural Gas Liquids: from 0.2 mbd net imports in 2007 to 1.1 mbd of net exports in 2017 – a positive change of more than 1 mbd
• Natural Gas: from 10.4 bcf/d of net imports in 2007 to 0.4 bcf/d of net exports in 2017 – a positive change of nearly 11 bcf/d
• Gas-and NGL-based chemicals: from about 6 MMt/y of net imports in 2007 to about 4 MMt/y of net exports—a positive change of more than 9 MMt/y
• Crude oil: from about 10 mbd of net imports in 2007 to about 7 mbd of imports in 2017 – a positive change of about 3 mbd

The full report can be accessed here.