How Oil Exports Benefit Texas Communities

Wed, September 19, 2018

For nearly 40 years, exports of crude oil from the United States were prohibited by federal law. That changed in December 2015, when Congress lifted that ban as part of a broader appropriations bill. As the largest oil producing state, and with multiple ports (i.e. Port of Houston, Port of Corpus Christi) that are no stranger to the global petroleum market, Texas has benefitted from exports more than any other state.

Exports Rise in Texas

Earlier this year, the United States surpassed Russia and Saudi Arabia to become the world’s largest oil producer, and Texas is a big reason why. The United States is now producing nearly 11 million barrels of oil per day (b/d), with nearly 44 percent (almost five million b/d) coming from just two fields: the Permian Basin in West Texas and New Mexico, and the Eagle Ford Shale in South Texas.

Texas Crude Exports On The Rise

Texas port cities along the Gulf Coast have already established themselves as vital export hubs, although much of that has traditionally focused on exports of refined products like gasoline and diesel. But that’s beginning to change in a big way. According to the U.S. Energy Information (EIA), crude oil exports from the Houston-Galveston port district – which also includes Freeport, Texas City, Port Lavaca, and Corpus Christi – accounted for more than 70 percent of the 2 million b/d the United States exported in May 2018.

In fact, the Houston-Galveston port district recently became a net exporter of crude oil for the first time ever, as crude exports surpassed imports by 470,000 b/d. Meanwhile, the Port Arthur port district, which includes the ports of Sabine, Beaumont and Orange, accounted for roughly a quarter of all U.S. crude exports since mid-2017.

The latest data show U.S. crude oil exports topped 2.2 million b/d in June of this year – a 61 percent increase from June 2017, and a 76 percent increase from June 2016. Combined with U.S. petroleum product exports, the picture is even more impressive: weekly exports of crude oil and petroleum products reached almost 6.7 million b/d in the first week of September – a more than 200 percent increase year-over-year from the first week of September 2017 and over 400 percent increase from the first week of September 2008. Overall, since 2008, net imports of crude oil and petroleum products have declined 62 percent.

Net Imports of U.S. Crude Oil and Petroleum

Local Benefits

Texans across the board are reaping the benefits from this growth in oil exports. For example, the Port of Corpus Christi – which was already exporting roughly $1.5 billion in crude oil per month last August – has drawn an estimated $50 billion in energy investments to build out larger shipping channels, expand storage and refining capacity, as well as build liquefied natural gas export terminals. With a current crude oil export capacity of 1.1 million b/d, some of these projects are projected to help the port more than double its crude oil export capacity to about 2.4 million b/d by the end of 2019.  

By doubling the Port of Corpus Christi exports capacity, the port will provide an even greater economic impact to the region. According to Charlie Zahn, the Port of Corpus Christi Commission Chairman, the port already supports 88,000 local jobs and generates an estimated $350 million in tax revenue. Just one project slated for the port – deepening and widening the shipping channel to allow for larger crude oil tankers to pass through – would contribute an immediate economic impact of $40 million in the first year. As Zahn notes:


In addition to crude exports, the export of refined products and petrochemical-based plastics are generating billions of dollars in economic impact for the Texas Gulf Coast. The growth in plastics exports alone “could create up to 10,000 new jobs,” according to Patrick Jankowski, the Greater Houston Partnership’s chief economist. This includes recently completed projects like Enterprise Products Partners’ $1 billion ethane export terminal that opened near Houston at the end of 2016, or ChevronPhillips’ $6 billion Baytown ethane cracker, which was finished in March of this year. Houston exports are benefiting Texans all along the Gulf Coast. 

But the construction of export infrastructure isn’t the only way growing oil exports are benefiting Texas communities. Rising global demand for American oil and petroleum products creates jobs and new investment opportunities throughout the supply chain.

For example, a number of pipeline projects are planned or currently under construction that will connect the Permian Basin to Gulf Coast export hubs and refineries, in addition to the infrastructure that already exists. This Energy Transfer Partners’ and Magellan Midstream Partners’ 600-mile Permian Gulf Coast Pipeline, and EPIC Midstream Holdings’ 730-mile EPIC Crude Oil Pipeline project. While exact revenue and job creation numbers from these projects are not available, a 2016 study from IHS found that crude oil pipeline construction supports an estimated 24.1 jobs per mile (factoring in direct, indirect and induced)

Based on that estimation, these two projects alone could generate more than 32,000 jobs in Texas – jobs that were spurred in large part by crude oil and petroleum exports.

Finally, additional export capacity ultimately means more production, which in turn supports additional local jobs and millions of dollars for school districts all across the state.  As a report from the Beaumont Enterprise, entitled “Expected oil boom could be big for small communities” recently highlighted:

A boom can be felt throughout the "whole town" of Sabine Pass and the surrounding Port Arthur area, Angulo said, as more rigs mean more jobs. Angulo said the Atlantic 7 Rig would have a full-time crew of 66.

Kristi Heid, superintendent of Sabine Pass ISD, said the industry's improving fortunes help the school district and the overall "family-oriented, tight-knit" community. She noted that one natural gas liquefaction plant is already built and another is pending federal approval.

Additional growth in offshore drilling would be "great for the community," she said.

Cutting the Trade Deficit

As U.S. oil production has grown, thanks in large part to Texas shale development, the volume of petroleum imports has declined substantially. In 2008, petroleum imports into the United States were valued at about $453 billion. By 2017, that number had fallen to $186.4 billion. When examined alongside the growth in exports, the net trade deficit for petroleum products dropped by over $324.7 billion between 2008 and 2017 – an 84 percent decline.

According to U.S. Census Bureau data, the Houston-Galveston port district ran a net trade deficit for crude oil in May 2017, valued at approximately $1.2 billion. By May 2018, that deficit had turned into a net trade surplus of $1.4 billion.

Crude Oil Balance of Trade

Houston-Galveston Port District

The latest data from the U.S. Census Bureau show that the United States exported a record $15.77 billion in petroleum products in July, while only importing $19.5 billion, cutting the deficit to near record levels. Petroleum’s share of the total U.S. trade deficit has declined from over 60 percent in July 2008 to only about 10 percent in July 2018.

Petroleum As % of U.S. Trade Deficit

Billions of dollars in investment are flowing into Texas to support oil exports. These investments are generating thousands of new jobs, cutting the trade deficit, and spurring additional tax revenue for Texas schools and other public services.

Put simply, oil exports are playing a major role in helping Texas communities thrive.