Fear Mongering on Exports

Kevin Hall, of McClatchy, writes:

“U.S. demand for oil and refined products - including gasoline - is down sharply from last year, so much that United States has actually become a net exporter of gasoline, unable to consume all that it makes.”

So far so good.

“Exports of U.S. refined product averaged 2.928 million barrels per day over the four weeks ending on Feb. 10, compared to 2.190 million barrels per day for the four weeks ending Feb. 11, 2011, the EIA said. This category is primarily gasoline, but it includes unfinished oils, fuel additives, ethanol and other blending components.”

Um.  No.  This category is not primarily gasoline.  Using the EIA data this is what we see:

Then we get the export fear mongering:

“The export picture suggests that when domestic demand rises, American motorists might be competing with drivers elsewhere for U.S.-made gasoline, which fetches a higher price as an export.”

Hall covers himself with the wiggle words, “suggests” and “might be” but this statement is still incredibly irresponsible given “the export picture” suggests no such thing. And we don’t even have to look elsewhere for proof, as this is made clear in the article! In his lead paragraph Hall makes clear that we are making more refined product than we are consuming and that exports are simply picking up the slack between domestic production and domestic demand.  Hence exports are up, and this is a very good thing:

Flexibility to export product in times of market imbalance helps refiners operate efficiently and maintains U.S. refining capacity. This contributes to U.S. energy security.  Not to mention keeping workers working.Refining enhances the U.S. economy by adding economic value to the raw material: In the case of exported petroleum products, the U.S. produces or buys crude oil, refines it at U.S. refineries and then resells finished petroleum products at significantly higher value.  This increase in value is what GDP measures.In 2011, fuel and other petroleum products were a significant part of U.S. exports (7 percent) as measured in dollars, at $107 billion. This was due in part to reduced domestic fuel demand (because of the lagging economy, increased use of renewables in finished petroleum products and more fuel-efficient cars) and in part because the industry produced at or near record amounts of gasoline and diesel in 2011.

Then article keeps the fear coming:

"To the extent that there is this export market that wasn't there before, it is certainly ... keeping prices higher than they otherwise would be," said [energy analyst John] Kilduff. "Exports were not material. Now they are becoming material."

Actually, the export market has always been there, providing refiners with a market when U.S. demand for various products is low.  But it isn’t keeping prices higher.  The EIA notes that in January 2012  refining costs AND profits made up 6 percent of the cost of a gallon of gas.

So refiners are getting only 20 cents a gallon of gross margin, of which, on average, 15 cents covers costs leaving a 5 cent per gallon profit. And yet we are to believe that taking away 8 percent of their market* would lower prices?

For too long the energy debate has been dominated by this sort of liberty with the facts.  And while it may sell newspapers it sells the American people short, and it isn’t going to lead to policies that get us where we need to go.

*Exports represent just 8 percent of the motor gasoline and ULSD produced in the U.S.

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A Natural Solution for Oil Seepage

The LA Times had an article yesterday on the effect of oil naturally bubbling up off the coast of California:

"Oil seeping from the ocean floor off Santa Barbara is taking a toll on seabirds that are turning up by the dozens along the Southern California coastline coated in crude oil and tar. The naturally occurring oil bubbles up and afflicts birds every winter, but wildlife rescuers in recent weeks have seen an unusual influx of oiled seabirds stranded on the shore as far south as Orange County…Scientists believe the murre population is growing and expanding south, putting the football-sized birds at greater risk of diving into waters slicked by Southern California's oil leaks, the most significant of which are found in the Santa Barbara Channel near Coal Oil Point, where thousands of gallons of oil seep into the ocean each day...The hypothermic, malnourished birds lose energy fast. So they either die offshore or, in an act of desperation, plant themselves on the beach."

An unfortunate situation, but one with a remedy, as Christopher Helman points out:

"What’s entirely missing from the story is any hint of how this bird killing could be stopped. The solution is simple: allow drilling off the coast. Stick a few wells into that shallow reservoir and within a few years enough oil would be safely recovered that it would no longer leak out to kill birds. I guess that’s such a political non starter in California that the reporter doesn’t even bother mentioning it…Occidental Petroleum has for decades produced oil from a handful of wells in Los Angeles harbor. California should be smart about this and open up the seepage area to drilling…"

View the original article here

Energy Works in Ohio

For the state of Ohio, the oil and natural gas industry currently means:

More than 230,800 statewide jobs provided or supported – with an average salary of $68,256 for non-gas station oil and natural gas employees.$11.4 billion contributed to state labor income.$22.7 billion contributed to the state’s economy.

With sensible energy development and sound tax policies, here’s what the oil and natural gas industry could mean to Ohio:

13,144 additional jobs created by 201515,840 additional jobs created by 2020

Energy works in Ohio, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.

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Itching for Floor Fight Over Higher Energy Taxes

Why did energy supporters in the U.S. Senate stand aside to allow consideration of legislation they oppose – raising taxes on America’s oil and natural gas companies? After all, there were more than enough votes to keep the proposal from coming to the floor.

Simple, in politics you choose the fights you think you can win, and Senate opponents of higher energy taxes feel like they’ve got the American people behind them.

Here’s why. A spate of surveys shows that strong majorities of Americans favor more production of oil and natural gas here at home. Both Gallup and Rasmussen have new polls showing Americans support construction of the Keystone XL pipeline, which would bring up to 830,000 barrels of oil per day from neighbor and ally Canada. Another Rasmussen survey indicates 2-1 support for developing energy from shale via hydraulic fracturing.

Then there was a Pew Research Center poll that suggests the reason for the findings in the others. Pew found that as gasoline prices rise, so does Americans’ interest in greater oil and natural gas production.

A Harris Interactive poll ties things together: It found 76 percent of voters nationwide believe higher taxes on the country’s energy producers could cost them more at the gas pump – which the Congressional Research Service substantiated in a report last year.

Americans’ reaction to increasing fuel costs – driven higher by the rising cost of crude on the global market – is understandable. They’re saying let’s have policies and strategies that could put downward pressure on crude supply as opposed to policies that would make energy producers’ operations costlier – potentially reducing exploration, development and production while elevating prices.

Thus, a Senate debate that supporters of more oil and natural gas production are eager for the American people to see and hear.

View the original article here

Confusing the History on the Keystone XL

White House Press Secretary Jay Carney this week, on the administration’s rejection of the Keystone XL pipeline:

"In terms of Keystone, as you all know, the history here is pretty clear. And the fact is because Republicans decided to play political with Keystone, their action essentially forced the administration to deny the permit process because they insisted on a time frame in which it was impossible to completely approve the pipeline." 

Wait. In the span of two sentences the history on the Keystone XL took a pretty good beating. In fact, in the exchange with White House reporters the only thing that’s clear is that Carney’s job was to make the Keystone XL history unclear. Let’s parse this statement by the press secretary and others.

First, the fact is the Keystone XL has been sitting on the administration’s plate for more than three years – or about twice as long as similar approvals have taken in the past. Talk of a rushed time frame to “completely approve the pipeline” is absurd after more than three years, three successful environmental reviews and numerous public hearings across the country.

More from Carney, quizzed by ABC’s Jake Tapper on how the president could claim to be for an all-of-the-above energy strategy and reject a pipeline that would bring upwards of 800,000 barrels of oil per day from Canada:

"But the President didn't turn down the Keystone pipeline.”

Whoah! The president is the chief executive. It’s his administration.

Carney:

“There was a process in place, with long precedent, run out of the State Department because of the issue of the pipeline crossing an international boundary …”

Suggesting that the State Department’s process was beyond the reach of the White House, in a kind of the-buck-stops-over-there assertion, is just dodging responsibility for a decision that clearly runs counter to the national interest.

Carney:

"The Keystone XL decision “required an amount of time for proper for review after an alternate route was deemed necessary through Nebraska at the request of the Republican Governor of Nebraska and other stakeholders in Nebraska and the region that needed to play out, to be done appropriately. You can't review and approve a pipeline, the route for which doesn't even exist.”

Now blame shifts to Nebraska and Gov. Dave Heineman, who objected to the pipeline’s route through the state’s Sand Hills region. But here’s Heineman last month, puzzled that the administration continues to use Nebraska as an excuse to shelve the project. The governor said the pipeline could start from either end and finish in Nebraska, which is possible because all of the other approvals are in place and because no one believes the pipeline won’t win final approval from Nebraska:

“At a minimum, the president of the United States could do a conditional yes. … Since the Department of State basically approved the old route, we don’t really think at the end of the day there is going to be a challenge there. … When you have an 8.5 percent unemployment rate in America – this is a no brainer.”

So yes, Carney’s memory on the Keystone XL needs refreshing. (See Sean Hackbarth’s post over at FreeEnterprise.com.) The pipeline would create 20,000 U.S. jobs during its construction phase and be integral to fully utilizing Canada’s oil sands resources that could create 500,000 U.S. jobs by 2035. As Hackbarth notes, the project has labor union and business support.

Meanwhile, Carney’s boss keeps talking about an all-of-the-above energy strategy – words that ring hollow when you look at what the real history of the administration’s handling of the Keystone XL pipeline.

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Energy Works in Arizona

For the state of Arizona, the oil and natural gas industry currently means:

Nearly 86,000 total jobs provided or supported statewide – with an average salary of $54,052 for non-gas station oil and natural gas employees.$4 billion contributed to labor income.$7.6 billion contributed to the state’s economy.

With sensible energy development and sound tax policies, here’s what the oil and natural gas industry could mean to Arizona:

682 additional jobs created by 2015.1,443 additional jobs by 2020.

Energy works in Arizona, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.

View the original article here

On Power and Fuel

Keith Hennessey with a reminder:

"If (when?) battery technology leaps forward to make hybrid or electric vehicles a significant share of the market, then electricity and its sources will begin to act as significant substitutes for gasoline and diesel fuel. At that point R&D to reduce the cost of solar power, wind power, nuclear power, hydro power, and natural gas power could start to affect the price at the pump enough for you to notice. But until then fuel and electric power are for all practical purposes separate issues, and when an elected official’s response to high fuel prices is more research on or subsidies for some form of electric power production, he is either confused or misleading you. More from the EIA here.

But until then fuel and electric power are for all practical purposes separate issues, and when an elected official’s response to high fuel prices is more research on or subsidies for some form of electric power production, he is either confused or misleading you."

More from the EIA here.

View the original article here