Where does US extract oil?

Crude oil is a liquid mixture of hydrocarbons that is used in the production of products including gasoline, diesel, jet fuel, and heating oils, all of which are instrumental in the daily lives of people all over the world. Crude oil is yellow to black in color and of variable density and viscosity. Crude oil is extracted from reserves and then put through a distillation process that breaks the crude oil into various components, called fractions, which are then converted into final products. In addition to the fuels listed above, heavier crude oil fractions are used to make lubricating oils such as petroleum jelly for detergents and soaps.

Crude Oil in the United States

The United States is the world's largest producer of crude oil, producing about 12.108 million barrels per day. The main oil-producing states in the U.S. are Alaska, New Mexico, North Dakota, Oklahoma, and Texas. The U.S. surpassed both Russia and Saudi Arabia in 2018 to become the world’s largest crude oil producer. While the United States is the largest producer of oil, it is also the largest consumer of oil. The U.S. consumes about 19.69 million barrels of crude oil per day. Because this is more oil than the U.S. produces each day, the oil must be imported from other countries.

U.S. Oil Imports by Country

According to data from the U.S. Energy and Information Administration, the United States imported between 8.1-8.8 million barrels of crude oil per day from July-December 2021. Just over a million barrels per day come from OPEC (Organization of the Petroleum Exporting Countries) nations, led by roughly 550,000 barrels a day from Saudi Arabia. The U.S. also imports nearly 7.5 million barrels of crude oil per day from non-OPEC nations. Chief among these is Canada, which supplies the U.S. with approximately 4.7 million barrels per day, significantly more than any other nation.

Top 10 Countries from Which the U.S. Imports Oil (in barrels per day Dec. 2021):

What did the IRA change about federal land leases?

The Inflation Reduction Act prohibits the lease of federal onshore or offshore territory unless a minimum amount of territory is also offered for lease to oil and natural gas companies for production.

For onshore territory, a minimum of 2 million acres of federal lands must be offered up in leases for the purpose of oil and gas production. For offshore territory, a minimum of 60 million acres of territory must be offered up in leases for the same purpose. Leases don’t need to be purchased to meet the law’s requirements.

The law also requires the Bureau of Land Management (BLM) to adjust its leasing program. The BLM is responsible for managing 700 million acres of subsurface lands, or roughly 30% of the United States, mostly located in 12 western states.

Previously, the BLM offered select federal territory for lease through an auction process starting at $2 per acre. Annual rents for federal territory cost $1.50 per acre for the first five years and $2 afterwards. Companies also pay royalties on revenue from oil and gas produced on public territory.

A 2021 report conducted by the Department of the Interior found the oil and gas leasing program of federal territories wasn’t providing a “fair return to taxpayers.” Specifically, the report states that rental rates and minimum bids had not changed in 30 years, and royalty rates had not risen in over 100 years.

The Inflation Reduction Act raised the minimum bid price to $10 per acre and raised minimum rent prices to $3 per acre for the first two years, $5 per acre for the subsequent six years, and $15 per acre after that.

The royalty rate, which generates more than 75% of revenues created by the land leasing program, rose from a minimum of 12.5% to 16.67% as well.

These revisions went into effect this October, meaning revenues generated by all land leases will likely increase by year’s end.

These adjustments only revise the BLM’s land leasing program, and not the lease of federal offshore territory. However, this process remains far more costly due to high installation and operational costs. As of August this year, only 18, or less than 2.5% of all natural gas and oil rigs in operation in the US, are for offshore production.

To learn more about energy, read about the Strategic Petroleum Reserve or US energy independence. Get the data directly to your inbox by signing up for our newsletter.