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We are supposedly producing 10 million barrels of oil here in the states and energy has gotten so plentiful that we are actually exporting it now (Per Trump) but yet at the fuel pump prices continue to climb with predictions of $4.00 a gallon gas making a return before its all over..
I believe the answer is that we do not necessarily use domestic supplies, the oil market functions as a global market, so our production doesn't necessarily correlate. Gasoline prices are a function of refining capacity as much as oil prices, so a slightly different animal. Point is, it's not a simple equation like "we produce more so it should be cheaper" - although maybe it should be.Quote:
Originally Posted by Muddy
If Trump said we export because we produce more than we need, I'd say he misspoke.
These mother fuckers have more of a stranglehold on people than the diamond mining association does.. All they are doing is controlling the supply so the demand can be upped..
Exactly, we use approximately twice as much oil per day as we produce:Quote:
Originally Posted by RBP
https://i.imgur.com/u4ADGJs.png
If we use so much I dont see why we would ever export a non-renewable energy source.. It seems much less about solving our deficit and more like padding pockets over the needs of the American people.
We do both the import and export thing and have been a worldwide producer for decades. The 'we produce more so it should be cheaper' mindset is definitely the way it should be, yet we've been getting raped at the pumps for years. Most factors are typically Saudi threat based. 'Someone over there whispered about closing a refinery' and bam, our prices skyrocket. Like the stock market, it doesn't take much to make the prices fluctuate.Quote:
Originally Posted by RBP
It's like mining raw diamonds. We pull a certain amount out of the ground, enough to subside on and export, and we still have the highest priced domestic diamonds because of a world market dictated by a group thousands of miles from us.
https://www.forbes.com/sites/rrapier.../#14a179443b07
In the years leading up to the shale oil boom, crude oil exports from the U.S. were nearly nonexistent. There were two reasons for that.
First, following the 1973 OPEC oil embargo, a crude oil export ban had been enacted as part of an energy bill that aimed to mitigate future oil crises. The crude oil export ban restricted crude oil exports from the U.S. to all countries besides Canada.
But even if the ban hadn't been in place, U.S. oil production severely declined for over three decades after 1970, even as U.S. crude oil consumption grew. So, over time, there simply wasn't as much crude oil available for export. (I use that phrasing with the caveat that the U.S. has been a net importer of crude oil and petroleum products since 1949. More on that below).
As crude oil production in the U.S. surged, the dynamics began to change. Aided by the crude export ban, the longtime West Texas Intermediate (WTI) premium over internationally traded Brent crude vanished and WTI began trading at a discount.
U.S. crude oil producers had to sell their oil to U.S. refiners, who were happy to refine the discounted crude and then export the finished fuel products at full price (because the ban didn't cover finished products).
Crude oil producers lobbied for an end to the export ban, and in late 2015 they got their wish when President Obama signed into law the Consolidated Appropriations Act, 2016. This $1.15 trillion spending bill contained a provision that stated: “To promote the efficient exploration, production, storage, supply, marketing, pricing, and regulation of energy resources, including fossil fuels, no official of the Federal Government shall impose or enforce any restriction on the export of crude oil.”
In 2016, the U.S. exported crude oil to nearly 30 countries. In 2017, monthly exports have exceeded one million barrels per day (BPD) on multiple occasions. But the U.S. still imports about eight million BPD of crude oil. As a result, I am often asked why we are exporting oil at all.
It comes down to the quality of the oil that is being produced, versus the kind of oil U.S. refineries are built to process.
Over the years, U.S. crude oil has gotten progressively heavier and sourer (meaning it contains larger hydrocarbon molecules as well as more sulfur.) Globally, heavy crude production increased in places like Canada, Venezuela and Nigeria. A wide price differential developed between heavy, sour crudes and light sweet crudes like WTI and Brent. Because crudes that are heavy and/or sour can produce about the same amount of finished products as lighter, sweeter crudes, refiners had a strong financial incentive to process the discounted crudes.
So U.S. refiners spent billions of dollars installing fluid catalytic crackers (FCCs), cokers, and hydrotreaters that are needed to process heavy sour crudes. After investing all of that money into processing the heavy crudes, the economics of running Bakken or Eagle Ford crudes in a heavy oil refinery are far less appealing than running a heavy Canadian or Venezuelan crude.
Heavy oil refiners would rather simply continue to import oil more suited to their needs, while the light, sweet crudes coming out of the U.S. shale plays are often a better fit for certain foreign refineries. Or, logistically it may simply be easier for Canada, for instance, to import U.S. crude for their East Coast refineries, while they export their heavy oil from Alberta to U.S. refineries that are equipped to process it.
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Part of the issue, as mentioned in this article, is that not all crude oil is the same. Different countries and refineries have various capabilities to process heavy versus light crude oil.