Why does the U.S. need to import oil when we are the largest crude oil producer in the world?

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The Jones Act strikes again!

Simply: if you are shipping something on a boat from one US port to another, it has to be on a US-made boat, staffed by US sailors, and flying under the US flag. For tax, labor, and industrial policy reasons all three of these are extremely rare by themselves and nearly impossible all together.

It is far more advantageous for Texas to export oil abroad, and California to import from Saudi Arabia, then to send a boat from Houston to Long Beach.

https://www.reuters.com/markets/commodities/oil-companies-work-around-jones-act-supply-us-fuel-markets-2022-08-18/

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When the refineries were built the crude that was readily available was the heavy crude. There was not a lot of light crude until the fracking boom. It’s also very costly to retrofit a refinery to change the crude they can use.

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Because it's cheaper.

Because the US is trying really hard to be the last one to run out of oil.

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There are three main reasons with individual complexities:

Existing infrastructure was designed to use specific combinations of oil. Not all crude oil is the same, and the chemical properties vary significantly depending on which basin it was produced from. America produces primarily “light” oils while Canada and Russia produce “heavier” oils. American refinery infrastructure (the massive chemical plants that break the crude oil into gas, gasoline, diesel, heating oil, solids, etc.) was designed to refine a blend of lighter and heavier crude oil. Replacing this infrastructure, especially in the current American legislative environment, would be extremely expensive.

The Jones Act: it is generally illegal to ship things from one U.S. port to another unless the vessel is domestically owned and flagged. Because the vessels must be owned, operated, and flagged domestically, the cost of operation increases dramatically to comply with environmental, labor, and safety laws. This is for a number of national policy reasons, but it does limit domestic transport of oil to rail, pipeline, or truck, all of which are more expensive than by water. If, however, the vessel is carrying oil from a foreign port, it does not have to comply with any of these regulations. It is important to remember that transportation commonly accounts for anywhere from 20%-80% of the total cost per unit depending on the consumer.

Strategic underproduction: unlike almost every other major oil producing nation, the energy industry is not nationalized in the United States. As a result of this, private companies must lease the mineral right from either private or public land. The federal government has long been cautious to limit how much development of federal “land” they allow each year in order to ensure that America is the last nation to run out of oil. The vast majority of American oil lies offshore in federally managed waters, meaning that the government determines when and how quickly to lease out plots. All lease auctions stopped for during the first year-ish of Biden’s presidency in an effort to encourage the transition to renewables, but the Inflation a reduction Act partially resumed this process to curb rising oil costs as Russia continues to harm global economies, ensure that companies continue to invest in infrastructure so that there is still domestic expertise, and ensure that there would be enough support for the bill.