In my last post, I alluded to the possibility that fuel refined from the Keystone XL pipeline will never reach U.S drivers' tanks. Furthermore, I suggested that if we really wanted to reduce the price of gasoline here at home, we would stop selling gasoline overseas and instead increase the supply here. As we know, if we increase the supply, the price will go down. At least short supply has been used as an excuse for the high price, so it only stands to reason that if we increase the supply, the price will go down.
But do we really export that much. After all, we are a net importer of crude oil. In fact, we continually hear that we need to increase our domestic supply in order to reduce our dependency on foreign oil. So, we must really need ALL that foreign oil we import.
Well, this article has just come out. It is titled, "In A First, Gas And Other Fuels Are Top US Export".
Not only are we a net exported of gasoline and other fuels, it is the TOP US EXPORT. That means we export more refined fuels than anything else. Top export. Numero Uno.
The numbers in the article are a bit confusing. They keep using different units, like barrels, gallons, days, and months. Let me put everything on a common basis using 42 gallons/barrel, 12 months/year, and 365 days/year so that we can see just how much fuel we are sending out of the country and how that relates to what we bring into the country.
We import 3.2 billion barrels of oil per year. (2.7 billion in 10 months)
We export 1 billion barrels of fuel per year. (117 million gallons per day)
According to the Texas Oil & Gas Association, on average we get 0.78 barrels of fuel (gas, diesel, jet fuel) per barrel of crude oil.
Thus, our fuel exports use 1.3 billion barrels of crude oil per year. At $100 per barrel, that is $130 billion dollars flowing to other countries.
So, what happens if we stop exporting fuel. That kind of depends on what we do.
- We could reduce our crude oil import by over one-third and not affect our domestic supply of fuel at all and possible drive down the world price of crude oil.
- We could use the fuel we are exporting to increase OUR domestic supply of fuel and drive down the price of gasoline.
If the Keystone XL pipeline is completed, the oil it brings into the US could be used to offset oil imports from other countries, or assuming refining capacity is available, it could be used to increase OUR domestic supply of fuel, or it could be used to increase our fuel exports.
Let's assume the refining capacity is available. The oil companies have a choice. One, increase domestic supply,drive down the cost of gasoline, and possible make less money, or sell it on the world market and make more money.
What do you think they will do?
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It all makes a lot of sense. I am in total agreement.
ReplyDeletethanks for the post
saludos,
raulito
Great article. But, my brain aches.
ReplyDeleteThank you, raulito.
ReplyDeleteThey want to make your brain hurt, j...j.
I think the oil industry will increase domestic supply and drive down the cost of gasoline, even if that means possibly making less money. After all, they want to be good corporate citizens and they have Americans' best interests at heart.
ReplyDeleteDon't they?
Tom,
ReplyDeleteHa ha ha ha ha ha ha ha ...
Oil companies always do the Right thing, no matter what.
ReplyDeleteHave a happy new year.
Tom, given what you said, I'm thinking the Japanese Tsunami debris reached the U.S. Pacific Coast and polluted your drinking water!
ReplyDeleteMy fantasy for 2012 is that Congress will suddenly develop some balls and force that greedy oil industry to cut gasoline down to where it SHOULD be, at $2 or so per gallon. They have been fucking the public for 35 years!
ReplyDeleteThe last time a barrel of oil was at its current price we paid more tha a dollar less for gas
ReplyDeleteSupply and demand has nothing to do with the price of gas
Make more money, I'm suspecting the accurate answer.
ReplyDeleteJust saying raises a point that needs raising. The difference can be explained by the manipulations of speculators. An oil industry insider of 30-plus years appeared on Olbermann's show a couple of years ago, IIRC. I do recall something he said. If speculators could be taken out of the picture, a gallon of gas would be more than a dollar cheaper. He also rattled off how many billions less consumers would have to pay a year, but I don't remember the total.
ReplyDeleteAnd who are the speculators? They are many of the same people and Wall Street outfits that brought down the economy, along with foreigners of similar description.
Of course Big Oil is going to insist on selling worldwide. Big Oil wants a seller's market. A worldwide market with emerging countries upping demand every year is made to order. Oil companies don't care what happens to America. They care about their own profits and the bank accounts of their executives and big investors.
One of the many reforms this country desperately needs is for the federal government to go after speculators, getting their hands out of our pockets and exacting reparations for past bilking.
SWA,
ReplyDeleteYou bring up one of the problems with large multinational corporations. I agree, they only "care about their own profits and the bank accounts of their executives and big investors". They take advantage of our tax laws. They funnel huge amounts of money to our legislators so that they will do their bidding, but they care nothing about the impact on the American people. We are merely an expense and/or at best an annoyance.
You seem to blame everyone except who is responsible. Corporations are responsible to their owners who are the shareholders. Corporations take advantage of tax laws to escape paying taxes. These tax laws were created by our "sold to the highest bidder" politicians.
ReplyDeleteSupport a fair tax, consumption tax, flat tax, whatever you call it but take the taxing authority out of the hands of our corrupt leaders. Make everyone pay their "fair share" including someone making corporations and even those on the lower income level
skud,
ReplyDeleteYou say,
"take the taxing authority out of the hands of our corrupt leaders."
Just whose hands would you put it in? Plus, the Constitution puts it in the hands of the politicians. How do you plan on getting around that little detail?
The fair tax is actually as it implies, fair. Everyone pays based on what they spend . This would capture the off the books economy, take the punitive nature of taxes away from the politicians and be a boon to the economy.
ReplyDeleteAside from the fair tax, eliminate payroll deductions and go to a quarterly tax payment. People get accustomed to the deduction of taxes but if they had to write a check for that amount every quarter, they might insist the federalists spend our money a little wiser.
All the fair tax does is change the rate. It does nothing about the abuses. Plus, you did not answer my questions about your previous post.
ReplyDeleteGuess I should have said corrupt politicians. Establish a set rate for a fair tax. This will never happen because it takes to much power away from the elected elite.
ReplyDeleteYou only mention that the fair tax changes the rate but it also would eliminate deductions for all, punishing the "rich" who can take advantage of the deductions to lower their overall tax rate. The way we impose and collect taxes favors the individual and companies who have the resources to manipulate the code. Go to a fair tax and the "rich" will pay their fair share, isn't that what the president has been preaching for.
Tax rate and deductions are separate issues. You can get rid of all the deductions if you want and still maintain a progressive tax schedule either higher or lower than what it is now. The only reason you call it a fair tax is because it is the same rate for all people. And many people question whether that is really "fair".
ReplyDeleteIt is not the rate that gives power to the "elected elite". It is the money.
Skudrunner, do your homework. Get some facts and then stop and think before writing.
ReplyDeleteYou've got pols who want campaign cash and have a few loose scruples about who they get it from. We have big-money interests corrupting pols and the whole political system. They've rigged the tax system through lobbying and buying elections.
The answer isn't a regressive flat tax. The answer is public funding of elections, with strict limits on when, where and how much others can spend to affect the outcome of elections. The answer is to also limit election campaign seasons.
The media won't support any of that because to do so would cost them money. Republicans don't want any part of it because they know they have to spend vast sums to overcome the fact most Americans oppose them on most issues.
Getting this done will require one or more constitutional amendments; not an easy task. But it's important, because if we continue down the same dead-end road we're on there's going to be some kind of crackup or crisis in this country.
We can't continue with a system where the wealthy, well-connected few get to corrupt government and politics with impunity, while diverting more and more wealth into their pockets by marginalizing everyone who's not wealthy and well connected. History is pretty clear about how movies like this end, and it's not a happy ending.
In all countries the wealthy, well-connected corrupt government so the US is no different.
ReplyDeletePublic funding of elections is a great idea but way to Utopian. It would have to be politicians who passed that, won't happen because it is against their interest. Limit the time frame for campaigning, nice idea but when you have a president who has served one year and campaigned for three, seems to be a stretch to expect any changes.