By DAVID R. BAKER, SAN FRANCISCO CHRONICLE
Faced with sluggish sales at home, American refineries are shipping their gasoline, diesel and other petroleum products abroad in record amounts, turning the country into a net exporter of fuel.
And that’s one of the reasons why gasoline now costs more than ever for this time of year.
The United States, long the world’s most voracious consumer of fuel, still imports almost half of its crude oil, the raw material for gasoline and diesel. But starting in 2008, the country began exporting more refined petroleum products than it imported. And the gap keeps growing.
In the first nine months of this year, the United States exported 655 million barrels of finished petroleum products, including 121 million barrels of gasoline, while importing 264 million barrels of finished petroleum products, including 32 million barrels of gasoline, according to the U.S. Energy Information Administration.
The recession and tepid recovery have tempered America’s thirst for gasoline at the same time drivers are turning toward more efficient cars. So refiners have sought eager markets elsewhere. The fuel exports, in turn, help prop up gasoline prices here.
“Instead of that product backing up and depressing prices, it’s being sent to other countries,” said Tom Kloza, chief oil analyst at the Oil Price Information Service. “It’s good news for the refining industries and their workers and the balance of trade and U.S. jobs.”
But Kloza predicts the exports may turn into a hot-button issue next year if gasoline prices increase.
The exports are not the main reason gasoline prices are so high.
So far this year, the price of crude oil on the New York Mercantile Exchange has averaged $95 per barrel, closing Friday at $100.96. Prices have been even higher in Europe. As a result, gasoline prices can’t fall far, even though domestic gasoline use peaked in 2007 and has remained relatively weak ever since.
A gallon of regular now averages $3.29 nationwide, according to AAA. A year ago, the average was $2.88. In Houston today, it was $3.08 a gallon. A year ago, it was $2.74.
Gasoline demand in the United States likely will increase when the recovery gains firmer footing. But it may not rise to previous levels. Federal fuel-efficiency standards for cars are increasing, and with gasoline prices still high, consumers may be reluctant to drive more.
“It’s going to be difficult to get back to a point where we see … year after year of gasoline demand growth around 2 percent, like we had before,” said Gordon Schremp, senior analyst for the California Energy Commission. “That dynamic, we believe, has changed.”
Irony for U.S. drivers
Demand for diesel and gasoline remains strong outside the United States. Mexico lacks enough refineries to supply its growing population, analysts say. And the economic downturn that started in 2007 didn’t hit South America as hard as the United States.
To some oil industry critics, the exports look like a deliberate effort to squeeze American drivers.
“It’s a way to keep prices up,” Judy Dugan, research director with the Consumer Watchdog nonprofit group, said of shipping fuel abroad. “Overseas consumers are benefiting at a cost to domestic consumers.”
Oil industry representatives bristle at that notion.
“That’s just complete rubbish,” said John Felmy, chief economist with the American Petroleum Institute lobbying group. The exports, he said, help keep U.S. refineries afloat despite shriveling profit margins in recent years.
The situation contains a cruel irony for American drivers: U.S. crude oil production has risen in the last two years, while domestic gasoline sales have fallen. And yet, gasoline prices remain stubbornly high.
The reason, analysts say, is that fuel is now part of a global market, flowing wherever prices are best.
“If the price in Europe is a dollar more per gallon, pre-tax, than what the United States is paying, and shipping is 50 cents, why in the world would I supply the United States?” said James Beck, lead analyst for the Energy Information Administration’s weekly petroleum supply team.