Top U.S. Export for 2011 Was Fuel; U.S. Gas Prices at Record High
For the first time since 1949, fuel -- gasoline, diesel, and jet fuel -- was the United States' biggest export in terms of dollars, the Associated Press reports.
In previous years, dating back to at least 2006, the top export had been aircraft.
At a time when oil and gas projects and processes, from fracking to tar sands extraction to the proposed Keystone XL Pipeline, are points of contention among environmentalists, labor leaders, Tribal leaders, Republicans and Democrats, the fact that the U.S. is actually exporting fuel can be a bit puzzling. However, it's important to bear in mind that the nation is still the world's largest importer of petroleum, or crude oil -- the flammable liquid that is refined to make various fuel products.
International oil markets are notoriously difficult to explain, since they depend not just on supply and demand but also world politics. Yet the main reasons for the surge in fuel exports seem to be fairly simple. First, due to a poor economy and more fuel-efficient cars, there is a lessening of demand in the United States for fuel. Overseas, in Latin America, for example, demand for refined fuel products is high.
But why, if there is enough domestically-refined gasoline to export, is there not enough to bring down the prices Americans are paying at the pump? Because it is simply not profitable to do so. Oil companies may be producing fuel domestically, but they are under no obligation to sell it to U.S. consumers at any particular price. As Tom Kloza, chief oil analyst at Oil Price Information Service, told the AP, "It's a world market."
Another reason for the high price of gas at the pump is the surging price of diesel fuel on the global scene. A November 12 L.A. Times article reported that demand for diesel has, in the words of the United States Department of Energy, "provided incentives to refiners to shift some production away from gasoline."
The law of supply and demand isn't working in U.S. consumers' favor, and isn't likely to anytime soon. An L.A. Times article from mid-December explained that as domestic demand for gas softened, oil refiners contracted, shuttering refineries. At the same time, international markets for gas were opening up. The net result: The supply of gas for U.S. motorists is particularly low, without the surplus or "cushion" of supply that has kept gas prices down in the past.
Andrew Lipow, president of Lipow Oil Associates, put it simply to CNBC: Refiners have "satisfied demand and exported the balance." That the market is working efficiently is of little comfort to drivers who paid record high holiday-season gas prices. Going forward, Lipow said, the price consumers pay for gas "is all going to depend on the crude price because in 2012, you have declining demand and adequate refined supply."
You need to be logged in in order to post comments
Please use the log in option at the bottom of this page