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Since 2008, U.S. oil and natural gas production has increased each year, while imports of foreign oil have decreased.
In 2011, U.S. crude oil production reached its highest level in 8 years, increasing by an estimated 110,000 barrels per day over 2010 levels to 5.59 million barrels per day.
Overall, oil imports have been falling since 2005, and net imports as a share of total consumption declined from 57 percent in 2008 to 45 percent in 2011 – the lowest level since 1995.
The Administration has announced the 2012-2017 Offshore Oil and Gas Development Program, which will open more than 75 percent of our potential offshore oil and gas resources.
For the first time since 1995, the U.S. will likely produce more oil than it imports. That’s great for the country’s trade balance, but the benefits of all that cheap domestic crude still haven’t shown up at the one place it matters most: the gas station. Even as fuel consumption has fallen to 16 percent below its 2007 peak, gasoline remains about a dollar higher than the average price over the past decade. So far this year, gasoline prices have risen 11 percent nationwide, to $3.65 a gallon.
Most of the surge in oil production has happened in places such as North Dakota, Wyoming, Colorado, and Oklahoma, far from refining hubs and big population centers. With competition fierce for limited pipeline capacity, producers have begun moving crude on barges and trains, adding as much as $17 a barrel to the price of domestic oil. That extra cost eventually makes its way to the price at the pump. Ethanol requirements have backfired. The idea was to stretch a limited oil supply, cut reliance on imported crude, and make use of abundant corn harvests. But today the ethanol program is raising costs for refiners even as the price of oil has fallen 10 percent over the last year.
In late 2011 the U.S. quietly surpassed Russia as the largest exporter of such refined products as gasoline and diesel. Exports to Venezuela and India more than doubled. Without realizing it, U.S. drivers are competing for American-made gasoline with consumers in Latin America and Asia, where demand is rising. “Americans don’t think about their prices being impacted by a global market,” says Morse. “The American public just thinks about the rising price at the pump.”
Despite the added costs of transport, U.S. refiners retain a price advantage over their foreign competitors in Europe and Latin America, since U.S. crude is still cheaper than most foreign benchmark blends. This has led to healthy profits for some of the nation’s largest refiners. Shares of Marathon Petroleum (MPC) and Phillips 66 (PSX) hit records in January after earnings beat estimates. Now those lucrative margins have come under pressure as fuel makers run headlong into a biofuel mandate that has become tougher and more expensive to meet.
This year, the law requires U.S. refiners to blend 13.8 billion gallons of ethanol into the fuel they sell to domestic customers. In their calculations when crafting the bill in 2007, lawmakers assumed gasoline demand would continue to rise and that refiners would need all that ethanol to make up 10 percent of the fuel sold to motorists. The problem is that U.S. drivers are consuming less, not more, gasoline because they’re driving fewer miles in increasingly fuel-efficient vehicles. As a result, refiners don’t need all the ethanol the government forces them to buy. To make up the roughly 400 million gallon difference between the ethanol the industry needs and the amount the government mandates, refiners must buy credits called Renewable Identification Numbers, or RINs.
The end result is that refiners have an even greater incentive to sell their fuel abroad, where it isn’t subject to U.S. ethanol requirements.
All of this means that while U.S. oil production is forecast to rise this year, much of it will be refined into gasoline or diesel for the new drivers of Brazil, India, and China. “You have demand growth in every market around the world,” says Schork. “We’d be paying considerably more than we are if we hadn’t had the runup in prices and the incentive to bring more oil to the market.”
Originally posted by ABNARTY
reply to post by six67seven
It seems like another of example Economics 101 not surviving in the real world. All this push over the last few decades to increase our production and refining capability was BS. Now we got it but Big Oil does not want to take a cut in profits. So what was the point?
Originally posted by nobeattles
In many of the poorest countries of the world gas is more expensive than it is in Murica.
Stop being so spoiled and expecting us all to die for you and pay your subsidized gas bill.edit on 14-5-2013 by nobeattles because: (no reason given)
Originally posted by generik
why is it that the people of the country that seems to have the LOWEST GAS PRICES on the planet as well as wages that are typically far above those in most of the world, seem to be the same ones that whine the most about high gas prices?
so again why is it that the country with the CHEAPEST gas seems to ALSO be the biggest complainers about the price being too high? :shk: