(To be clear, overall U.S. demand continues to rise; it???s just rising more slowly than domestic capacity to produce such products.)
One often repeated statement by the Obama administration defending high oil prices is to say that while US demand is down over the last 3 years the price of oil is up because of growing demand over seas.
They keep saying global demand drives the price of oil. Not declining US demand.
For the first time in almost two decades, the United States has become a net exporter of fuel, according to new data.
According to the U.S. Department of Energy, America — the world’s largest consumer of oil — exported 54,000 barrels more of petroleum products each day in February than it purchased on the global market.
The milestone marks the latest in a five-year decline in net imports, reports the Financial Times.
Gregory Meyer reports:
The American Petroleum Institute, an industry group, reported US refined product exports rose 24.4 per cent in the first quarter of 2011 from a year ago, to 2.49m barrels per day. Imports declined 14.4 per cent to 2.16m b/d. The export increase is led by diesel and finished petrol, data from the Energy Information Administration show.
So why the decrease? After all, for many years the U.S. was a net importer of both crude oil and refined fuels.
According to the report, it’s a combination of domestic industrial growth and reduced consumer demand in the post-recession period. (To be clear, overall U.S. demand continues to rise; it’s just rising more slowly than domestic capacity to produce such products.)
Top buyers for America’s petroleum products are Mexico, Ecuador and other Latin American nations whose demand easily exceeds production capacity. Brazilian demand is also keeping Gulf of Mexico refineries busy.
But there are more complicated market and regulatory forces at work.
Meyer, again:
Petrol in Gulf states such as Texas is cheaper than in east-coast cities such as New York and Boston. But it is often more profitable for traders to export it, said Philip Verleger, an independent oil economist. A pipeline connecting the Gulf to New York is fully booked, while federal law requires traders to hire expensive US-flagged vessels to ferry oil in domestic waters.
All this as prices at the pump surge and the federal government threatens to end oil subsidies. The real question: can the U.S. actually reduce absolute demand?
