Exporting Trouble

Post from Jeffrey Winters:

I don’t watch a lot of TV, so I run across memes secondhand. Recently I’ve heard several people independently question why the U.S. is exporting oil when the price of gas here is so high. On the surface—and my guess is that’s how certain news channels present this factoid—that does seem to be a conundrum.

But oil industry operations aren’t superficial. And if you dig into the data from the Energy Information Agency you discover some facts that put the import/export puzzle into better light. The first is that almost all of the “oil” exports is in finished products, and the vast majority of that is in petroleum coke (useful as solid fuel or as an industrial product but worthless in your car), distillates such as diesel, and heating oil. As of December—the most recent month for which the EIA has published data—less than 20 percent of the exports by volume is gasoline.

As for why we’re exporting any petroleum products, a look at the utilization of refinery capacity suggests an answer. Unlike the late 1990s and early 2000s, when refinery utilization was routinely above 95 percent, refineries today have a lot of excess capacity thanks to some of the lowest gasoline sales figures in 30 years. Rather than idling some refineries, oil companies are importing oil that wouldn’t be used in the domestic market, adding value to it, and selling the refined product to countries such as Canada, Mexico, and the Netherlands at a profit.

So, yes, we’re exporting petroleum products at a time of high gas prices. But if we weren’t, that by itself would do little to bring down prices at the pump—and it would put some people in the refinery industry out of work.

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The Editor

John G. Falcioni is Editor-in-Chief of Mechanical Engineering magazine, the flagship publication of the American Society of Mechanical Engineers.

March 2012

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