The 2011 Argus Americas Crude Summit, held in Houston last January, was named "Life After Macondo" and focused on the aftermath of the BP Deepwater Horizon oil spill. But American consumers might have been far more interested in a presentation that ventured far from that script.
Joanne Shore, team leader and lead operations research analyst at the Energy Department's Energy Information Administration, and colleague John Hackworth essentially explained why Americans were about to pay more for gasoline in 2011 than they ever had before.
Shore's and Hackworth's analysis (which can be found here) explained why it wouldn't matter that Americans were driving less and using higher-mileage vehicles that burned less fuel. It wouldn't matter that additives like ethanol were lowering the amount of refined oil in every gallon of gasoline.
Even as U.S. refiners were shutting down facilities because of lowered U.S. demand, Shore and Hackworth explained, they had already found thriving and lucrative markets overseas for their products.
Their main points: "world growth in distillate fuels" demand had "provided some attractive export opportunities for U.S. refiners"; U.S. low-sulfur diesel products were more attractive to foreign buyers than higher-sulfur fuel coming out of Russia; and they were far closer to South and Central American markets than distant European competitors.
Their analysis seems to have been correct. In 2007, U.S. fuel exports overseas held steady throughout the year at 1.24 million to 1.25 million barrels a day, according to Energy Department statistics. In 2011, the average export amount reached a record level that was more than twice as high, and the trend accelerated throughout the year.
In November and December, U.S. fuel exports averaged between 2.77 million barrels a day and 2.89 million barrels a day, their highest ever. In the U.S., in 2011, drivers paid an average of about $3.50 a gallon for gasoline, also the highest ever.
Today, according to the AAA Fuel Gauge Report, Californians are paying an average of $3.602 for a gallon of regular, 28.7 cents a gallon more than they have ever paid on Dec. 30. Nationally, the average cost for a gallon of regular today is $3.269 or 19.8 cents a gallon more than ever on this day of the year.
--Ronald D. White
Photo: Valero Energy Corp.'s Wilmington refinery. U.S. refiners exported record amounts of fuel to foreign buyers after Energy Department predicted a booming market overseas. Credit: Christina House / Los Angeles Times