12/15/2011 9:10 PM ET|
Why the US is sending oil overseas
Amid high gas prices and all the calls for more drilling, you may be surprised to learn that the United States is now a net exporter of oil. Here's why -- and how investors can play this remarkable shift.
The United States has become a net exporter of oil.
Pick yourself up off the floor. It's true -- at least by one definition of "oil." And the change to shipping oil overseas will have major effects on U.S. economic growth and on what you should hold in your portfolio.
Let's start by nailing down exactly what I mean by oil.
The U.S. is not about to become a net exporter of crude.
In September, the United States exported 35,000 barrels a day of unrefined crude oil. That same month, the U.S. imported 9 million barrels of crude oil a day. If you look just at crude, the U.S. is the same huge importer of oil it has been for as long as most of us can remember.
But if you look at the figures for refined petroleum products, the picture is shockingly different. In September, the United States exported 3.2 million barrels of refined petroleum products a day and imported just 2.2 million barrels a day. That's a surplus of exports over imports of roughly a million barrels a day. For the first nine months of 2011, according to the U.S. Energy Information Agency, the U.S. exported 752 million barrels of refined petroleum products: gasoline, jet fuel, kerosene and such chemical-industry feed stocks as ethylene, butane and propylene.
The swing in less than a decade is immense. For 2005, for example, the U.S. imported 900 million more barrels of refined petroleum products than it exported.
This huge shift doesn't have just one cause.
Booming oil fields, slow economy
Part of it is due to the oil boom in the United States as a result of new technologies. Petroleum production from oil shale has turned North Dakota into a major domestic oil producer, with production rising to 424,000 barrels a day in July 2011 from 98,000 barrels a day in 2005. (See "Unemployed? Head for North Dakota" for more.)
Oil from oil shale has also reversed what looked like the inevitable production declines for older fields in states such as Texas. Oil production there had tumbled from 2.6 million barrels a day in 1980 to 1.9 million in 1989 and down to 1.087 million in 2008. But instead of continuing its march toward zero, production in Texas edged back up in 2009 to 1.106 million barrels a day and to 1.169 million in 2010. That reversal has given U.S. refineries a lot more domestic crude to work with.
The shift is also partly a result of the very slow economic recovery in the United States. U.S. gasoline consumption topped out in 2007. In August 2011, a peak driving month, U.S. consumers used almost 8% less gas than they had four years earlier. In contrast, gasoline consumption continues to climb in faster-growing emerging economies. Gasoline consumption in India, for example, was 5.4% higher in October 2011 than in October 2010.
The U.S. export swing is also the result of a shortage of refinery capacity in some parts of the world and for some kinds of products. For example, while Mexico, one of the world's big oil producers, doesn't import any crude from the United States, it does import a growing volume of refined petroleum products. Mexican imports of gasoline climbed by almost 70% from 2005 to 2010. Brazil, which imports neither crude oil nor any gasoline from the United States, has still seen imports of refined petroleum products from the United States grow by 220% from 2005 to 2010. The biggest jump there has been in distillate fuel oil.
And, finally, part of it is geography. The economies of Latin America are seeing some of the fastest rates of growth in consumption of petroleum products -- and the U.S. Gulf Coast refineries are perfectly placed to export to those countries. In addition to Mexico and Brazil, Argentina and Peru have recently become net importers of petroleum products from the United States.
What the oil shift means
I can see two big effects from this shift to the U.S. being an exporter of refined oil products.
First, it dampens, to some degree, the impact of higher oil prices on the U.S. economy. There's no evidence to suggest that U.S. consumers have gotten any benefit from the United States becoming an exporter of refined oil products. Gasoline prices, as far as anyone can tell, haven't fallen as a result, for example. Higher oil prices are still likely to take money out of consumers' wallets that could have been spent on things other than gasoline.
VIDEO ON MSN MONEY
The beat goes on, yeah the beat goes on. And the American is taking the beatings. The politicians are gathered around again lying to us and each other. Wonder what a government shut down would really look like?
Beans, blankets and bullets will be found under my Christmas tree this year.
It's the final stages of the death of our country. We have become a net exporter of most of our commodities, commodities we should be keeping for ourselves as a surplus which would also keep prices down more. Instead they export the surplus and we still pay more. Welcome ladies and gentlemen to the USA game show "You..... can't....... win".
We are already in a war with China, a financial war which we are losing one corporate acquisition, one closing manufacturing plant, and one more homeless or jobless american at a time. The fact that our gov't takes no action to protect our jobs with import tariff's against these countries with whom we have such a deficit with, tells me that gov't is just puppets for the mega-corps gutting this country. They don't care as long as they make their cut.
U.S. companies own the refineries. A slight hiccup in supply (too much rain, too little rain, earthquake, etc.) and the price shoots up.
The notion of nationalizing the industry is repulsive...what industry is next ?
IF Exxon buys the oil, and uses their own refineries, they should be able to charge 20.00 per gallon if they so chose - it is then up to the consumer to go across the street to ARCO.
The REAL issue is that the antiTRUST statutes are not being enforced. There is NO f-ing way that gasoline, bought in the U.S., and refined in the U.S., can cost TO THE PENNY as much as foreign oil. The price is set as between the major players (BP, Exxon, etc) - THAT is anti-trust.
In keeping with my earlier post, the mideast is and SHOULD be, the only game in town.
Russia has INCREDIBLE reserves...but, the cost to transport is hellactious..AND, because of the uncertainty of them as a reliable supplier (they will hold back on us if, for example, we dont "tow the line" on "starwars"); Venezuela also has incredible reserves, but Chavez hates our guts (as well as Israel's) and are thus unreliable.
The future (assuming we dont increase domestic supply) is CANADA, with the 3rd largest reserves on the planet. Delivery IS easier (yes..the pipeline SHOULD be built) and they are true allies. (lol, THEY know that the ONLY reason they're not speaking Russian, is because of US).
Yes, it's our own oil companies that are robbing us. They are a strong influence with opec also. The Saudi royal family made 250 billion off our rigged market in one year. The Emir of Kuwait has hundreds of billions in that same market. Wonder how much that has to do with the reason we spent billions defending these two absolute dictatorships that are run like company stores. Greed is destroying our country and the oil companies get billions tax free from the oil depletion allowance. We will force real change or be pushed into depression and chaos. we are in bad need of a government. This one is already taken.
This is where I agree with most of you on here - that the politicians are to blame; that they put the interests of EVERY other country, before our own - perhaps they think they'll like US more .
...how's that workin' for us so far ?
* If we raise fuel efficiency standards in American cars by one mile
per gallon, in one year, we would save twice the amount of oil that
could be obtained from the Arctic National Wildlife Refuge
* Raising it by 2.7 mpg would save enough to eliminate all the oil
imports from Iraq and Kuwait combined
* Raising it by 7.6 mpg would save enough to eliminate 100% of our
gulf oil imports into this country
..........but we will never do any of this because to have someone "lead" the nation in productive directions means the oil companies can't make the cash they want to make. and those in political positions can't get their payoff's.......
Took me a few minutes to get the data. Again, you are ridiculously wrong. While gas prices are a little lower in Sonora, baja, etc. than the average, the difference in gas prices is pennies.
But since you buy it by the liter in Mexico (3.7 liters to the gal, approx) your $0.95 gas, yeah, that's per liter and when you turn it into gallons that became $3.51 per gallon.
Man you are stupid.
And your attempt at manipulating your way out after Rigo Hernandez called you on your lie, well, at $1.10 (per liter) it would make it over $4.00 per gallon, making you even more wrong.
Dude, just stop.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.