Believe it or Not: U.S. Exports More Gasoline Than Ever

Posted by Mike Tirone - Tuesday, December 6th, 2011

For years now, the United States has been struggling to maintain their fluctuating gasoline prices but in reality, the U.S. is quite practically swimming in gasoline. What may go unnoticed to many, the U.S. is actually exporting a record of amount of it.

In September, the country exported 430,000 MORE barrels of gasoline a day than it imported, according to the U.S. Energy Information Administration. That amount is nearly double from the start of the year. Many experts in the industry believe this over-exporting trend is not going to stop either.

Back in late 2008, the U.S. began exporting gas to try and offset the initial phrases of the economic downturn. But starting in 1960, the country not only used up all of it's gas it produced domestically but also had to import gas from Europe and other regions.

The demand for gas in the States has significantly dropped by 10% in the past few years. It peaked in 2007 at 9.6 million barrels a day to 8.8 million barrels today, according to the EIA.

The drop in demand has many causes; the recession tightening people's wallets, the advent of more fuel efficient vehicles, higher prices of gas and greater use of ethanol as an ingredient in gasoline. Demand for other products made from crude oil like diesel and jet fuel has also declined, although not as much.

Plenty of oil is still being imported by the U.S. to make gasoline and is still incredibly dependent on foreign countries for well over half the crude the country uses.

The one strong advantage the U.S. has is its massive refining infrastructure. Because of the refineries, more gasoline is being produced, along with diesel and jet fuel. So much so that there is an excess of gasoline to export to countries where demand is still quite strong like Brazil, Chile, and Mexico.

From CNN,

The Wall Street Journal, which reported on the export trend last week, said the United States is on track this year to be a net exporter of refined products for the first time in 62 years.

"We've got plenty of excess refining capacity," said Jonathan Cogan, a spokesman for EIA. "It's a reminder that this is a global oil market, and it's reflected by the movements of products to where they will get the highest prices."

People in the industry are seeing this trend more frequently, like Mark Williams, the global head of refining, trading and marketing for Royal Dutch Shell (RDSA). He says that exporting diesel and other refined products from the U.S. used to rarely happen but of recently it's becoming more common.

“It's growing as a new business,” he said, but also warned that the U.S. wouldn't become a huge exporter of fuel.

Either way, the ability to export oil is great for Shell and it's competitor oil companies like Exxon Mobil (XOM) BP (BP) and Chevron (CVX) because they can use their more modern refineries in the U.S. to then make gasoline for the rest of the world.

The issue that lies here is that with all of this gasoline, American drivers expect prices to drop significantly. But that won't be happening. Experts predict that $250-a-barrel oil is on it's way, therefore leading to surging gasoline prices once again, especially during the summer months. Even though U.S. demand may potentially hit its lowest level in ten years, the gas prices look to reach record highs, says chief oil analyst Tom Kloza of the Oil Price Information Service.

“I can understand it, from a truck driver's perspective,” he says. “You're paying $4 or $4.50 a gallon to run your rig, yet we're exporting the crap out of this fuel. I'd be outraged too.”

Kloza cautioned against restrictions on exports of diesel or gasoline, a move he expects politicians to talk about in 2012.

He explains that there is nothing forcing oil companies to bring crude to the States to refine which jeopardizes the jobs of thousands in the refining industry.

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

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