An ominous note in the happy melody of increased gasoline exports

posted at 5:40 pm on December 5, 2011 by Tina Korbe

As I reported last week, the U.S. has been on track to become a net exporter of petroleum products for the first time in 62 years — and, sure enough, the U.S. actually passed that important milestone this month. CNN Money reports:

The United States is awash in gasoline. So much so, in fact, that the country is exporting a record amount of it.

The country exported 430,000 more barrels of gasoline a day than it imported in September, according to the U.S. Energy Information Administration.

That is about twice the amount at the start of the year, and experts and industry insiders say the trend is here to stay.

But a tweet from trade lawyer Scott Lincicome redirected my attention to the very bottom of the CNN Money Article — to a couple of paragraphs that quote an oil analyst at the Oil Price Information Service. The analyst’s quotes are excellent — but the topic he’s addressing is ominous. The relevant portion:

Still, [analyst Tom Kloza] cautioned against restrictions on exports of diesel or gasoline, a move he expects politicians to at least talk about in 2012.

There’s nothing forcing oil companies to bring crude to the United States to refine, Kloza said, noting that the refining industry employs thousands of workers.

“If you restrict exports, you’d really be looking for trouble,” Kloza said. “You’d just see the refining and the jobs go offshore.”

I bring this up because, in response to my earlier post, a number of commenters complained about high gas prices — and understandably so. Demand for gasoline in the U.S. could hit the lowest level in a decade next year, yet U.S. consumers will likely still pay record-high prices for gas.

But any complaint consumers make to Washington about gas prices will be met with the sort of solution the federal government typically offers — more regulation. That, in turn, would lead to the typical wages of more regulation — in this case, the unintended consequence of lost jobs.

In fact, what we need is less government involvement in the energy sector. As I also wrote in my last post, to be a net exporter of petroleum products is not the same as to be energy independent. But energy independence would almost assuredly lower prices at the pump, as U.S. oil refining companies would no longer have to pay OPEC-manipulated prices for crude.

What will it take to be energy independent? Two ideas off the top of my head: Really reopen the Gulf to drilling with a streamlined permitting process and frack, baby, frack.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

In Florida and CA gas will NEVER be cheap!!

abobo on December 5, 2011 at 5:47 PM

I’m not going to complain, I’m hoping The Won won’t notice so he doesn’t destroy another part of the energy sector.

Cindy Munford on December 5, 2011 at 5:48 PM

RE: Exporting Gasoline with high prices here.

It’s the way markets work. Product goes to he who pays the best price. and all those US dollars the Federal Reserve has poured into the global economy still has buying power, still has the power to bid up price, and it’s called ‘inflation’.

But it doesn’t count as inflation because government figures ignore food and energy costs because of ‘volatility’.

Skandia Recluse on December 5, 2011 at 5:51 PM

Cindy Munford on December 5, 2011 at 5:48 PM

I’m with you Cindy…

… I feel like I’m a member of the French underground putting up with being occupied while praying for the Allies to show up.

Seven Percent Solution on December 5, 2011 at 5:52 PM

Since I am currently on a platform in the Gulf of Mexico, I agree with the drill now and drill often philosophy. This year has been very slow for my end of the offshore business. I expect things to really kick off as the election gets closer so that the Dems can say “look at all the jobs we just created and look at the price of gas drop”. They think that we will have short memories and fall for their stunt; however, we will remember that the Dems impeded progress and tried to kill the petroleum industry.

DAT60A3 on December 5, 2011 at 6:03 PM

The country exported 430,000 more barrels of gasoline a day than it imported in September, according to the U.S. Energy Information Administration.

That is about twice the amount at the start of the year, and experts and industry insiders say the trend is here to stay.

Why? Because demand is down due to horrible economy, but demand is up in places like China?

I suspect a huge propaganda ploy here on the part of the Obama Administration which will be used as an argument to, say, put the kibosh on the Keystone Pipeline. We don’t need it! We’re swimming in gasoline! Off to do some research…

What will it take to be energy independent? Two ideas off the top of my head: Really reopen the Gulf to drilling with a streamlined permitting process and frack, baby, frack.

Yes, and ANWR.

Buy Danish on December 5, 2011 at 6:04 PM

What will it take to be energy independent?

KICK BARACK OBAMA OUT OF OFFICE!

GarandFan on December 5, 2011 at 6:05 PM

Demand for gasoline in the U.S. could hit the lowest level in a decade next year, yet U.S. consumers will likely still pay record-high prices for gas.

And if exports are stopped, jobs are lost, and refineries shut down, then when the ecomony turns around (somewhere around spring of 2013) and demand goes up, we will be dependant on imported gasoline.

It would be totally short-sighted and outright stupid, which is why the Dems will try to do it. It’s a pattern they rarely deviate from.

iurockhead on December 5, 2011 at 6:06 PM

Oops, should have read the CNN story in full which tries to explain the why of it.

Buy Danish on December 5, 2011 at 6:17 PM

It’s not about energy independence. If we can buy the product from somewhere else cheaper, who cares. The problem is the government has made the business environment for producing in the U.S. a determent not an asset. EXXON, BP, Conoco, etc. would love to have more production here but it’s more profitable to do it in other countries.
That’s what’s wrong with buying foreign product. Don’t worry about energy independence, it’s a bad argument.

lowandslow on December 5, 2011 at 6:20 PM

You could turn this country into a pin cushion of well ,both on an offshore, and it won’t change the price.

When someone pumps a barrel of oil they would look at the market price and match it to sell it you only end up displacing where it was drilled for.

As far as I know there is only one new refinery being built here after a lag of 30 years since the last. That is a refinery in Texas right next to another adjacent one that has been there for many years. This new refinery is for heavy high sulfur crude which the Saudis are getting ready to drill for in their newest fields they are opening up. This new refinery is on US soil but it owned by a Saudi corporation. They will ship their oil here ,refine it and export it to other places.

We already ship in refined product rather than refine it here due to the massive epa interference. One of the largest new refineries is a second being built in India next to the one that takes care of most of their domestic capacity.

It is being done with a 100% export market being built,mainly to serve China.

CommentGuy on December 5, 2011 at 6:38 PM

If the price did plummet, with this bunch, they’d raise the TAXES forever and keep us at #3.00 or FOUR! grrrrrrrrrrrr

golfmann on December 5, 2011 at 6:52 PM

What those ignorant of the oil refining business don’t realize is that some of our refineries increased capacity back in the early 1980′s to insure a supply of crude oil, at a reduced price, in exchange for some of the refined products being exported back to the supplier.

A case in point is PEMEX/Shell JV with the former Shell refinery in Deer Park (Houston) TX. PEMEX paid for a new Stratford alkylation unit (to make reformulated base)there as well as other capital investments. Included was a longterm contract with PEMEX for a crude supply to Shell and export of the extra unleaded fuel to Mexico.

I know about this because I was handling the sales of process units and dismantling a Shell refinery in Carson, CA. Numerous times I was involved in conference calls with senior refining management and the 2nd in command of PEMEX, who made a visit to the refinery and we ran the numbers on shipping an alkylation unit from that site to Mexico as well as a relatively new cat cracker.

You pundits never seem to know details on the refining side of the equation.

Kermit on December 5, 2011 at 7:36 PM

Additionally, Gulf Coast refiners have long shipped full shipload quantities of refined products to points along the St. Lawrence River, especially during winter time of Arctic Diesel (diesel with naphtha loaded on top and blended during the voyage there).

Kermit on December 5, 2011 at 7:39 PM

CommentGuy on December 5, 2011 at 6:38 PM

Name it.

Existing refineries have had to be expanded as no new permits have been issued for decades (at least since Jimmah was president.)

Kermit on December 5, 2011 at 7:40 PM

Cindy Munford on December 5, 2011 at 5:48 PM

… I feel like I’m a member of the French underground putting up with being occupied while praying for the Allies to show up.
Seven Percent Solution on December 5, 2011 at 5:52 PM

That’s a great analogy.

listens2glenn on December 5, 2011 at 8:05 PM

I fear US petro providing the dollars to sustain the Welfare State beyond its natural demise.

Myno on December 5, 2011 at 8:38 PM

Because making a product and exporting it is a bad thing? Putting some actual products on the world stage, as opposed to more printed dollars is a bad thing?

Well, maybe that’s how it’s taught to the retards in their Ivy League Poli Sci classes, but that’s not how it was taught in my Midwest Economics classes.

MNHawk on December 6, 2011 at 7:00 AM

It costs more $$ to get crude out of the ground here than it does in Saudi. If people want to drill here, increase domestic production and put US citizens back to work in high paying private sector jobs, then they should stop complaining about paying more for fuel. Buy US produced petroleum products. DD

Darvin Dowdy on December 6, 2011 at 7:26 AM

Yesterday the price of gasoline jumped from 3.10 for regular to 3.25–in one day! They must have read your article! There is no logical reason for such an outrageous increase in one day.

wepeople on December 6, 2011 at 8:35 AM

I suspect a huge propaganda ploy here on the part of the Obama Administration which will be used as an argument to, say, put the kibosh on the Keystone Pipeline. We don’t need it! We’re swimming in gasoline!

By the way, are we exporting diesel, jet fuel, and home heating oil?

Two ideas off the top of my head: Really reopen the Gulf to drilling with a streamlined permitting process and frack, baby, frack.

How about three ideas: Refine, baby, refine. The USA is one of only a few countries with privately-owned oil refining companies, but we haven’t built refineries in 30 years due to over-strict EPA regulations and NIMBYism. If we are importing crude and exporting gasoline, couldn’t we help our “balance of payments” (exports minus imports) by building more refineries here, and providing more private-sector jobs for American refinery workers?

This is also a not-so-secret weapon we could use against Iran if they develop a nuke, or after their crashing the “English” embassy: despite its abundant supplies of crude oil, Iran has only ONE refinery which cannot provide the needs of its own people for refined petroleum products. An embargo on fuels, enforced by a naval blockade (and agreements with Saudi Arabia, Iraq, and Kuwait), could cripple the Iranian people and lead them to revolt against the regime. Even if Iran gets an atomic bomb, the missile to deliver it needs fuel.

It costs more $$ to get crude out of the ground here than it does in Saudi. If people want to drill here, increase domestic production and put US citizens back to work in high paying private sector jobs, then they should stop complaining about paying more for fuel.

It costs a lot less to ship crude from an oil well in the Gulf of Mexico than from the Persian Gulf.

Also, there is a very tight balance between crude supply and demand on the world market, with prices driven by traders bidding on contracts of oil to be delivered 1 to 5 years into the future. If Obama decided to re-open the Gulf of Mexico (and other offshore areas) for drilling, futures traders would anticipate an increased future supply, and bid DOWN the price of crude on the world market. President George W. Bush did this in July 2008, and crude prices dropped from $135/barrel to $50/barrel within 6 months.

Steve Z on December 6, 2011 at 10:58 AM