Top US Export-Fuel

January/03/2012 16:01PM
2 interesting comments, join the discussion
Please follow and like us:

This is a story of apples and oranges. The US imports finished products. For 2011 that is estimated to be 750 million barrels. The US exports finished products. For 2011 that is estimated to be 848 million barrels. In 2011 the exports exceeded the imports. A good share of that was to Mexico. Most of the imports come to the East Coast. The exports are from the Gulf Coast where our refineries are located. We import 70% of our crude requirements.

If it is cheaper to buy finished products in the New York Harbor from Europe than to bring in crude to the Gulf Coast, refine that crude and then ship finished products back to New York, Europe wins. If it’s cheaper to ship Mexican crude to the Gulf Coast and sell finished products back to Mexico than for Mexico to buy from Europe, Mexico will buy from the Gulf Coast  rather than import from Europe.

Refining crude oil is like cattle processing. You get hamburger, asphalt, and you get filet minjon, premium gasoline from the same barrel of crude. All the refineries in the US can’t match perfectly with all the product demand in the US. Hence, you make too much hamberger and not enough filet. You sell hamburger and buy filet.

US refineries are closing. They can’t make a profit. Demand is down due to conservation and the economy. If the economy ever turns around(after the next election) demand will go back up. Would you rather the US refineries stop closing and sell to Mexico or close and have no ability to meet demand when the economy turns around?

The Daily KOS will tell you refiners are keeping gasoline prices up by exporting gasoline and keeping supply tight. Politicians will say we should stop exports.  You read what is here and decide for yourself.


Gas And Other Fuels Are Top U.S. Exports, For First Time

By CHRIS KAHN 12/31/11 04:38 AM ET Associated Press

Gasoline , Jet Fuel , U.S. Gas , Exports , U.s. Fuel , United States Diesel , United States Gas , United States Top Exports , Green News

NEW YORK — For the first time, the top export of the United States, the world’s biggest gas guzzler, is – wait for it – fuel.
Measured in dollars, the nation is on pace this year to ship more gasoline, diesel, and jet fuel than any other single export, according to U.S. Census data going back to 1990. It will also be the first year in more than 60 that America has been a net exporter of these fuels.

Just how big of a shift is this? A decade ago, fuel wasn’t even among the top 25 exports. And for the last five years, America’s top export was aircraft.

The trend is significant because for decades the U.S. has relied on huge imports of fuel from Europe in order to meet demand. It only reinforced the image of America as an energy hog. And up until a few years ago, whenever gasoline prices climbed, there were complaints in Congress that U.S. refiners were not growing quickly enough to satisfy domestic demand; that controversy would appear to be over.

Still, the U.S. is nowhere close to energy independence. America is still the world’s largest importer of crude oil. From January to October, the country imported 2.7 billion barrels of oil worth roughly $280 billion.

Fuel exports, worth an estimated $88 billion in 2011, have surged for two reasons:

_ Crude oil, the raw material from which gasoline and other refined products are made, is a lot more expensive. Oil prices averaged $95 a barrel in 2011, while gasoline averaged $3.52 a gallon – a record. A decade ago oil averaged $26 a barrel, while gasoline averaged $1.44 a gallon.

_ The volume of fuel exports is rising. The U.S. is using less fuel because of a weak economy and more efficient cars and trucks. That allows refiners to sell more fuel to rapidly growing economies in Latin America, for example. In 2011, U.S. refiners exported 117 million gallons per day of gasoline, diesel, jet fuel and other petroleum products, up from 40 million gallons per day a decade earlier.

There’s at least one domestic downside to America’s growing role as a fuel exporter. Experts say the trend helps explain why U.S. motorists are paying more for gasoline. The more fuel that’s sent overseas, the less of a supply cushion there is at home.

Gasoline supplies are being exported to the highest bidder, says Tom Kloza, chief oil analyst at Oil Price Information Service. “It’s a world market,” he says.

Refining companies won’t say how much they make by selling fuel overseas. But analysts say those sales are likely generating higher profits per gallon than they would have generated in the U.S. Otherwise, they wouldn’t occur.

The value of U.S. fuel exports has grown steadily over the past decade, coinciding with rising oil prices and increased demand around the globe.

Developing countries in Latin America and Asia have been burning more gasoline and diesel as their people buy more cars and build more roads and factories. Europe also has been buying more U.S. fuel to make up for its lack of refineries.

And there’s a simple reason why America’s refiners have been eager to export to these markets: gasoline demand in the U.S. has been falling every year since 2007. It dropped by another 2.5 percent in 2011. With the economy struggling, motorists cut back. Also, cars and trucks have become more fuel-efficient and the government mandates the use of more corn-based ethanol fuel.

The last time the U.S. was a net exporter of fuels was 1949, when Harry Truman was president. That year, the U.S. exported 86 million barrels and imported 82 million barrels. In the first ten months of 2011, the nation exported 848 million barrels (worth $73.4 billion) and imported 750 million barrels.Once again, US oil exports explained… poorly

By John Kingston on May  9, 2010  6:12 PM| 6 Comments| No TrackBacks

The shores on the Gulf Coast are not the only thing that might get fouled as a result of the BP Macondo spill. Reasonable understanding of how oil markets work may be next in line to be covered in muck, if we look at the latest release on energy from the Center for American Progress.

On May 6, CAP issued a press release whose thesis was pretty basic: the US exports oil  in quantities that are about equal to the amount of oil produced in PADD 2. A bit under half of that is offshore. So just don’t export, and we can cut back on the dangerous act of offshore drilling.

After Platts posed some questions to CAP, the group did revise its statement and pointed out that the exports were in the form of products and not in the form of crude. In its original statement, it referred only to “oil” exports, but the implied message was clear: if the US did not export the amount of oil that it does, it could reduce its offshore production by a like amount. As it said: “Does it make sense for the United States to bear the health, economic, and environmental costs of this offshore production for oil that is shipped elsewhere? If our oil needs are so great that we must open sensitive, formerly protected areas to drilling, this oil should remain in the United States for domestic consumption. But not all of it is.”

The US does export petroleum molecules. But it almost rarely does it in the form of crude. But the US exports a fair amount of other things. For example, the EIA, in its most recent weekly report, reported 154,000 b/d of NGL exports, a figure likely to rise as more shale gas comes on line; 458,000 b/d of residual fuel, as resid’s share of the electric generating market continues to dwindle and even as supply is squeezed out of the market by coking capacity; and 441,000 b/d of petroleum coke, which also makes sense, because the US has a large amount of deep conversion capacity through coking, and one of the end products of coking is petroleum coke.

In the latest report, the US also was reported to be shipping out 252,000 b/d of gasoline, more than half of it going to Mexico with a good chunk to several impoverished Latin American and Central American nations; and 389,000 b/d of distillate, again, most of it to Latin America but with a significant amount to the Netherlands, whose terminals in places like Rotterdam serve as the basis for further shipment into a distillate-short European continent.

All of this is easily discernible, but instead CAP makes a simplistic equation. If the US didn’t ship out the oil it is exporting then it wouldn’t need to produce an offsetting amount of crude.

This theory is saying that if the US slices downstream exports of apples, it can cut upstream production of oranges. But then you’ve cut off a feedstock supply for the refineries’ production of what the US still very much needs, like gasoline? And what does the US do with petroleum coke it doesn’t need, or LPGs, or distillates? Presumably the prices for those products would drop to bargain-basement levels, possibly killing refining margins in the process and forcing refiners to cut back output of things the US most definitely does need – like gasoline.

Also inherent in the CAP analysis is that US refiners can fine-tune their plants to produce precisely the balance of products that would eliminate exports and at the same time cut the amount of crude that needs to be produced in the US.

But refining isn’t like having 10 potatoes and deciding to bake six of them and mash the other four. The decision-making available to refining managers is not that precise. You put crude through a refinery, and a refining manager can tweak and twist and squeeze to the yields that are most desirable, based on prices and transportation costs. But even after that, you’re going to get gasoline, and you’re going to get distillates, and you’re going to get a lot of other things, sometimes in quantities more than can be sold in the domestic market. If they can’t be exported, listing the unintended consequences on markets and supply lines would probably take a few hours.

For example, if the US stopped shipping distillates to Europe, European refiners would have to squeeze out even more distillate, and probably would do that squeezing by cutting down on their gasoline yields. That means less gasoline to export to the US, driving gasoline prices in the US higher. Is that a CAP goal?

The relatively small portion of the US supply/demand balance that is exported has long been a ripe target for political gain, but it also serves as a platform in which an utter lack of understanding of how markets work can be put on display.  (Rep. Ed Markey, a long-time oil industry critic, has called for a ban on US oil exports).

This could all be easily dismissed, but this report comes from CAP, whose relationship to the Obama administration last year was described by Time magazine this way: “It is difficult to overstate the influence in Obamaland of CAP.”  This report from CAP is irresponsible in not explaining how oil markets work, and in showing no sign that its authors even have any understanding of why the US is an oil exporter in certain areas. Given CAP’s significance in Washington, these misguided views are not insignificant.

Please follow and like us:

Other Articles You Might Enjoy:

Leave a Reply