Despite tight supply, US refiners export most gas in three years

  

Category:  News & Politics

Via:  hallux  •  4 weeks ago  •  15 comments

By:   Lucia Kassai - Bloomberg

Despite tight supply, US refiners export most gas in three years

S E E D E D   C O N T E N T



While President Biden is fretting about high gasoline prices, even going as far as asking OPEC+ to raise oil output, U.S. refiners are exporting the most gasoline in three years.

Shipments of the fuel in the first eight months of the year rose to 802,000 barrels a day, the highest for the period since 2018, before the pandemic started. At the same time, American drivers are paying the highest prices at the pump since 2014. Overseas demand is only set to increase going forward as Mexico, the top importer of U.S. gasoline, is still in the early stages of recovering from the pandemic.

The high rate of gasoline exports shine a light on the wider global oil demand picture and underscore the limitations the Biden Administration has in keeping retail prices in check. U.S. Energy Secretary Jennifer Granholm said the government is “looking at” a release of crude from the Strategic Petroleum Reserve. But that would only temporarily resolve the underlying tightness in the crude market, according to oil consultancy Energy Aspects.

“The White House itself has limited options in what it can actually do,”said Krista Kuhl, a Houston-based oil consultant with FGE. One of which being an emergency release of crude supplies from the Strategic Petroleum Reserve. An emergency release has only happened three times in the almost 50 years since the SPR was created.

Most U.S. gasoline exports go to Latin America. Refiners shipped 139,000 barrels a day to Brazil, the highest volume in data going back to 1945. Mexico, America’s biggest foreign buyer of gasoline, still hasn’t recovered to pre-Covid levels but should in the next two years as its economy bounces back from the pandemic.

Pain at the pump isn’t just a U.S. problem. Prices south of the border are also high because the U.S. dollar is so strong that it’s making imports suddenly more expensive. Gasoline prices in Brazil went up 46% this year and are the highest in data going back to 2013. In Mexico, gasoline prices are so high that some Mexicans might drive into the U.S. to fill up their tanks when the borders reopen on Monday.

The pull from Latin America is expected to remain strong despite the uneven post-pandemic recovery in the region, says Felipe Perez, a strategist at IHS Markit Ltd. Brazil, he says, is recovering faster than Mexico due to a “sizable” stimulus package and gas demand is expected to return to 2019 levels before the end of the year ahead of the summer in the Southern Hemisphere.

Mexico, which was experiencing an economic slowdown before the pandemic hit, and didn’t enact a stimulus package, should return to 2019 levels only at the end of 2023, Perez said. Despite the slowdown, Mexico remains the biggest foreign buyer of U.S. gasoline.

Higher gasoline prices in the U.S. shouldn’t hurt demand for now, says Urvish Patel, a London-based analyst with FGE. “This could be exacerbated if a further slowdown in manufacturing activity as a result of supply chain disruptions depresses trucking and economic activity, as has been the case in Europe recently,” he said.


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Hallux
Sophomore Principal
1  seeder  Hallux    4 weeks ago

No comment ...

 
 
 
devangelical
Professor Principal
1.1  devangelical  replied to  Hallux @1    4 weeks ago

it's price gouging by the oil companies, plain and simple. they're floating in inventory.

 
 
 
Hallux
Sophomore Principal
1.1.1  seeder  Hallux  replied to  devangelical @1.1    4 weeks ago

Maybe those far left commies one keeps hearing about will nationalize the refineries.

 
 
 
devangelical
Professor Principal
1.1.2  devangelical  replied to  Hallux @1.1.1    4 weeks ago

I read long ago there hasn't been a new refinery built in the usa in over 30 years. supply and demand, manipulated...

 
 
 
Buzz of the Orient
Professor Principal
1.1.3  Buzz of the Orient  replied to  Hallux @1.1.1    3 weeks ago

Got to watch out of those "commies".  LOL

QqLmNDKSnL-6.png

 
 
 
Kavika
Professor Principal
2  Kavika     4 weeks ago

And currently, 550 wells are operating in the US.  Prior to the pandemic 700 plus were operating. OPEC is pumping less now than before the pandemic.

 
 
 
devangelical
Professor Principal
2.1  devangelical  replied to  Kavika @2    4 weeks ago

the exploration biz in my state folded up and moved on 2 years ago.

 
 
 
Baron Creek
Junior Participates
3  Baron Creek    4 weeks ago

It's interesting the focus is entirely on export of gasoline , while ignoring the import of gasoline ...which is higher. 

Then there is this...

An emergency release has only happened three times in the almost 50 years since the SPR was created.

It was developed with an eye on a 90 day backstop of supplies, but current sits north of 500 days (based on 2021 net imports/exports).

It is something the President can decide to release and even entertained this idea a couple of months back, but chose not to. In this era of green energy and COP26, it might not be the politically responsible thing to do, nor would it be popular with energy majors, by depressing crude prices.

It does beg the question... what is to be done with that 612M barrels of crude sitting in those salt mines?

I favor a incremental drawdown to "0" over the next 10 years.

 
 
 
Split Personality
PhD Principal
3.1  Split Personality  replied to  Baron Creek @3    3 weeks ago

before the price bottoms out?

 
 
 
Baron Creek
Junior Participates
3.1.1  Baron Creek  replied to  Split Personality @3.1    3 weeks ago
before the price bottoms out?

Such a thing would require one of two scenarios, imo. A global economic slowdown, which is not desired... or promises being kept, which are not very likely, imo. Case in point would be the resistance to reduction of the SPR by so many in both political camps. You would be led to believe that it is extremely difficult, which is not true. It would only roil the markets a bit, not unlike China's recent pulling from their SPR.

The optimism and euphoria of actually achieving emissions targets, crashes against "the rubber meets the road" reality. Everyone hopes for the best, but continues to prepare for the worst. Apparently, gambling on hope is a loser's game.

 
 
 
Ronin2
PhD Quiet
4  Ronin2    4 weeks ago

Never heard of oil and gas contracts? Much of what is being pumped right now in the US is already bought and paid for; which is the reason they need to find new oil deposits and develop them.

Biden has done a lot to diminish the development of new wells.

Biden’s orders direct the secretary of the Interior Department to halt new oil and natural gas leases on public lands and waters, and begin a thorough review of existing permits for fossil fuel development. In addition to the pause on leasing, Biden will direct the federal government to conserve 30% of federal lands and water by 2030 and find ways to double offshore wind production by that time.

The Environmental Protection Agency on Tuesday will propose rules to plug methane gas leaks at hundreds of thousands of oil and gas wells in the U.S., marking its most aggressive action yet to curb climate-warming greenhouse gas emissions.

The agency’s measures will strengthen regulations on new oil and gas wells and impose new requirements for existing wells that previously escaped methane regulations. President Joe Biden will formally announce the proposals during the second day of the COP26 climate summit in Glasgow, Scotland, according to senior administration officials.

The methane initiatives will aid the president’s commitment to cut domestic emissions in half by 2030 and reach net-zero emissions by mid-century. The proposals will also push forward the U.S. and European Union’s Global Methane Pledge, a pact to cut methane emissions by 30% by the end of the decade.

Oil companies only run wells so long as they are profitable. Making them harder to run and maintain makes the decision to shut them down that much easier. 

Even leftist MSN knows that Biden is to blame for the increase in oil and gas prices; of course making an enemy out of Saudi Arabia doesn't help.

 
 
 
Hallux
Sophomore Principal
4.1  seeder  Hallux  replied to  Ronin2 @4    4 weeks ago

The leftist MSN is Liz Peek? That was almost funny.

 
 
 
Kavika
Professor Principal
4.2  Kavika   replied to  Ronin2 @4    4 weeks ago
Biden’s orders direct the secretary of the Interior Department to halt new oil and natural gas leases on public lands and waters, and begin a thorough review of existing permits for fossil fuel development. In addition to the pause on leasing, Biden will direct the federal government to conserve 30% of federal lands and water by 2030 and find ways to double offshore wind production by that time.

As usual, that is a load of BS.

BILLINGS, Mont. — Approvals for companies to drill for oil and gas on U.S. public lands are on pace this year to reach their highest level since George W. Bush was president, underscoring President Joe Biden's reluctance to more forcefully curb petroleum production in the face of industry and Republican resistance.

This is a worldwide problem and not limited to the US.

Gas prices skyrocket as the global energy crisis worsens

191031134221-matt-egan---profile-headshot-small-11.jpg

By   Matt Egan ,   CNN Business

Updated 12:02 PM ET, Tue October 12, 2021

New York (CNN Business)The cost of energy was dirt cheap in the spring of 2020 as roads and airports sat nearly empty during the height of the Covid-19 pandemic.

Energy demand is back   today as the world economy reopens -- but supply simply hasn't kept up. That's why   US oil prices have skyrocketed   $120 since crashing to negative $40 a barrel in April 2020. US oil prices finished above $80 a barrel on Monday for the first time in nearly seven years.
Crude gained 1.5% to end the day at $80.52. The last time oil closed above $80 was October 31, 2014.
All of this is leading to   sticker shock for many Americans   filling up at the pump -- at a time of the year when gas prices typically cool off. The national average price for gasoline hit a fresh seven-year high of $3.27 a gallon on Monday, up by 7 cents in the pas Gas prices are at 7-ye t week alone,  according to AAA.  Gas has nearly doubled since bottoming at $1.77 in April 2020.
High gas prices will only exacerbate elevated inflation, squeeze the budgets of American families and hurt President Joe Biden's political fortunes.
Unfortunately, prices at the pump may get lifted even higher by the   global energy crisis .
Natural gas prices have skyrocketed so much , especially in Europe and Asia, that power plants and factories may increasingly turn to a relatively cheaper fuel source for electricity: crude oil.
"It's a case of just trying to keep the lights on," said Matt Smith, Kpler's lead oil analyst for the Americas. "This is essentially creating demand that typically isn't there,"

$100 oil in the cards?

Citigroup on Monday ramped up its Brent oil forecast to $85 a barrel for the fourth quarter and said crude will likely hit $90 at times. The Wall Street bank cited "price contagion this winter" and the expected switching of power plants away from sky-high natural gas to oil.
Citi added that a "very cold winter" could see Europe "running out of gas" by February.
Oil has long been there as a potential substitute for natural gas -- except until recently, it didn't make any financial sense. That's because for much of the past dozen years, natural gas prices have been very low, making switching to oil uneconomical.
But in Europe,   natural gas prices   have gone from below $2 per million BTU last year to as much as $55 this fall. That is the equivalent of $320 a barrel oil.
Bank of America has warned that a cold winter could boost oil demand by half a million barrels per day, lifting Brent crude to $100 a barrel. That in turn would cause more sticker shock for American drivers because gas prices are priced off Brent crude.
"We may just be one storm away from the next macro hurricane," Bank of America strategists wrote in a recent note to clients.

Record coal prices in China

It's not just high natural gas prices that are playing a role here.
Chinese coal prices have hit record highs   amid flooding in northern China that forced the closure of dozens of coal mines. Coal remains the main source of energy in China, used for heating, power generation and steelmaking. China is now   grappling with power shortages,   prompting the government to ration electricity during peak hours and some countries to suspend production.
Against this backdrop, gasoline prices have crept higher and higher in the United States -- adding to inflationary pressures gripping the economy.
Patrick De Haan, head of petroleum analysis at GasBuddy, said $3.30 gas prices nationally are likely around the corner.
"Looking out on the horizon, I really don't see an organized drop in prices," said De Haan. "The market is starting to feel explosive. The fundamentals are there for that to continue."

OPEC in the driver's seat

 
 
 
Split Personality
PhD Principal
4.2.1  Split Personality  replied to  Kavika @4.2    3 weeks ago

Meanwhile LNG exports broke records 4 times during the new Administration and they don't include new pipelines

to Mexico which are adding and will continue to add increasing NG exports

Natural Gas Exports to Mexico on the Fast Track (enverus.com)

 
 
 
Buzz of the Orient
Professor Principal
5  Buzz of the Orient    3 weeks ago

The refineries probably got 5 cents a gallon more than they could have in the USA.

 
 
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