Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on April 19, 2014
US exporting a ‘tidal wave’ of gasoline, other fuels
U.S. refiners are sending a “tidal wave” of gasoline, diesel and other refined products onto the world market, taking advantage of the surge in domestic oil development that has helped drive Gulf Coast crude stockpiles to record levels, according to a new report.
The jump in domestic oil supplies means the U.S. is on track to become a net exporter of gasoline — producing more than it needs — next year, said Wakefield, Mass.-based ESAI Energy in an analysis released Thursday.
Refiners boosted their output by 130,000 barrels per day in 2013, over the previous year – a trend that is likely to continue with predicted production gains of 135,000 barrels per day in 2014 and another 110,000 in 2015, the energy research firm said. Much of that will be flowing from the Gulf Coast, where refiners are expanding capacity and benefiting from climbing crude supplies.
The supplies keep prices low enough that refiners can benefit from “healthy margins” between their raw materials costs and the prices they get for final products, ESAI said.
Ultimately, ESAI predicts the average U.S. output of nearly 8.9 million barrels per day of gasoline in 2015 will be more than enough to supply U.S. motorists, even as domestic gasoline demand rebounds along with the nation’s economy.
“The outlook for gasoline production in the United States is decidedly robust,” the group said.
New paradigm
It’s a remarkable new paradigm for an industry that saw four dozen refineries shut down in the 1990s. Now, many refineries are buying discounted domestic crude and then turning it into diesel, gasoline and other refined products that fetch higher prices set on a world market.
The domestic drilling boom – and the surge in oil flowing from North Dakota, south Texas and other regions – already has allowed the United States to claim “net gasoline exporter” status at brief times in recent years.
“Going forward, these periods should be longer and more common,” ESAI said.
Moving crude: Oil industry leaders clash over oil exports
There are caveats. The United States will continue exporting and importing gasoline simultaneously, with the Gulf Coast generally sending refined products overseas even as the East Coast buys foreign supplies to satisfy regional demand that is not met because of strained pipeline capacity.
And the U.S. probably will still import more gasoline than it produces to satisfy domestic consumers during the peak summer demand season, noted ESAI analyst John Galante. But gasoline surpluses are likely to show up in the first and fourth quarter, when demand is relatively low.
There will be “a lot more gasoline being produced and exported from the Gulf Coast, and some gasoline imports being backed out from the East Coast,” Galante said.
Nationwide, refineries are running harder and faster to take advantage of discounts on domestic crude.
“Broadly speaking, utilization is pretty good,” said Bill Day, a spokesman for San Antonio-based refiner Valero Energy Corp.
“U.S. refiners have the advantage of this huge influx of North American crude oil production.”
Record stockpiles
At Valero, the steady supply of light sweet crude from U.S. sources means the company has been able to halt imports of that high grade, low-sulfur oil at its Gulf Coast refineries.
But much of the United States’ refining capacity is geared toward heavy crudes from Venezuela, Canada and other countries. The mismatch has contributed to record-setting stockpiles of oil on the Gulf Coast.
Previously, crude stockpiles had swelled in Cushing, Okla., tanks, but the launch of the southern portion of the Keystone XL pipeline has helped drain the Cushing hub, sending the crude to the Gulf Coast.
On April 11, Gulf Coast crude inventories reached 207.2 million barrels, a record high achieved not only because of the new pipeline capacity but also because some refineries temporarily are using less crude as they undergo seasonal maintenance, according to the Energy Information Administration.
Rosy refiner outlook
The rosy outlook for refiners – and U.S. gasoline supplies – could shift if the Obama administration or Congress revise the 39-year-old ban on exporting raw, unprocessed crude. Although petroleum products can be exported freely, U.S. crude oil generally is barred from the global market, with some exceptions including supplies from Alaska, and sales to Canada.
Some domestic oil producers and industry allies on Capitol Hill have been pressuring the administration to lift the crude export ban entirely or make more modest changes to allow foreign sales of the ultra-light hydrocarbon mixtures known as condensates that also flow out of wells.
“If there is any allowance for any kind of crude or condensates export, that obviously causes a shift,” Galante said.
7 Comments on "US exporting a ‘tidal wave’ of gasoline, other fuels"
eugene on Sun, 20th Apr 2014 12:40 am
If Bull Sh– were gold, we could pay the national debt.
Makati1 on Sun, 20th Apr 2014 1:07 am
Hahahaha… Thanks for the chuckle, eugene. You are correct. If the BS coming out of the US were fertilizer, we would all live in jungles and could reclaim all of the worlds deserts.
Davy, Hermann, MO on Sun, 20th Apr 2014 12:02 pm
Poor MAK, articles like this give you indigestion. You can’t stand some good news out of your hated evil US economy.
This is great news for a segment of the US economy where we have comparative advantage. In these last few years left of status quo BAU having a strong refinery sector is another great feather in North America’s hat. We will see North America remain an important player on the sinking global BAU ship because of energy and food. North America will survive longer then the periphery tird world countries. NA has advantages over an Asia/ME in overshoot and a Europe that is resource poor. It is ashamed that North America is not seeing the hand writing on the wall now and making any and all necessary changes to lifestyles to adapt and mitigate the coming food and energy crisis that is just a few short years away. We are seeing food and energy pressures so there is still some time to pick low hanging fruit but precious little time.
rockman on Sun, 20th Apr 2014 12:50 pm
Just some clarifications most here probably already understand.
“…taking advantage of the surge in domestic oil development” All of the refined products we export could be made so solely from the oil we import. IOW we wouldn’t need one bbl of the increase in domestic production to make those exports.
“The domestic drilling boom…already has allowed the United States to claim “net gasoline exporter” status at brief times in recent years.” How much gasoline we export has no relationship to the number of rigs drilling. During the late 70’s we had almost 3X as many rigs running and we were exporting an insignificant amount of gasoline compared to current levels.
“The rosy outlook for refiners – and U.S. gasoline supplies – could shift if the Obama administration or Congress revise the 39-year-old ban on exporting raw”. Completely ads backwards. The last thing the refiners want in for the ban to be lifted. Refiners buy oil… they don’t sell oil. Exporting oil has the potential to raise prices for domestic oil. Higher domestic oil prices mean smaller crack margins for the refiners.
shortonoil on Sun, 20th Apr 2014 4:40 pm
We have just completed an NPW (net present worth) analysis of the Bakken. We use the Bakken as a bench mark because it is the highest quality oil produced from shale in the US. Most of our calculations are based on energy equivalency, but economic analysis can give a rough check on those determinations.
The NPW analysis of the Bakken establishes its breakeven point at an interest rate of 5.7%. Above that the average Bakken well would be losing money, below that it would be making money. Of course, interest rates are now set by Central Bank policy, and not supply and demand in an open market. Using an energy equivalency approach these wells begin losing money late in the third year. That indicates that the true interest rate that would be set in an open market is about 7.0-7.1%.
The US capacity to export finished products competitively is highly dependent on the approximately 1 million barrels of crude that can now be refined from shale. Without that production the price of crude would be $10 – $15/b higher, resulting in a much smaller crack spread for the industry. To keep the nation’s balance of payments, and federal interest payments within acceptable levels the FED will have to keep interest rates low. They will do this even though this is wiping out the asset base of Middle America.
Over the next couple of years the shale industry will be facing some serious head winds. We will be posting more on this at our site over the next few weeks.
http://www.thehillsgroup.org
Nony on Mon, 21st Apr 2014 3:30 pm
The quantities are pretty sizable. If you add the net export of finished products to the net import of crude, it makes the independence “gap” even smaller. The numbers are really substantial: 2 million bpd FP export versus 20 million bpd crude use. That’s 10%. When put versus the crude gap…it makes it even smaller. It’s not some tiny thing.
Nony on Mon, 21st Apr 2014 3:31 pm
@short:
“Over the next couple of years the shale industry will be facing some serious head winds. We will be posting more on this at our site over the next few weeks.
http://www.thehillsgroup.org”
DID your site predict the rapid increase of 3 million bpd of US production of LTO? If you did, then I may want to take your predictions of headwind seriously. If not, then I may assume you are just always predicting flawed low.