Crude Exports And Consumer Benefits

on September 13, 2016 at 2:00 PM

Largest Crude-By-Rail Unloading Terminal In The U.S.

More than eight months after restrictions on exporting domestic crude oil were lifted, the U.S. Energy Information Administration (EIA) reports that U.S. crude exports are on the rise and are heading to a variety of destinations. First, the surge in exports since restrictions were lifted:

crude

And the destinations for those exports (other than Canada):

destinations

EIA:

In the first five months of 2016, U.S. crude oil exports averaged 501,000 barrels per day (b/d), 43,000 b/d (9%) more than the full-year 2015 average. … [A]fter the lifting of restrictions, the number and variety of destinations for U.S. crude oil exports has changed. So far in 2016, crude oil was exported to 16 different nations, six more than 2015 and double the number of destinations in 2014. … In March 2016, total crude oil exports to countries other than Canada exceeded those to Canada for the first time since April 2000, 259,000 b/d versus 249,000 b/d. In May 2016, when total U.S. crude oil exports reached 662,000 b/d; exports to countries other than Canada exceeded exports to Canada by 46,000 b/d.

While it may be too soon to estimate the long-term effects of exporting U.S. crude, both here at home and around the world, over the first two quarters of the year it doesn’t appear that there have been significant adverse impacts on the U.S. economy or consumers, as was predicted by some opposed to lifting the restrictions. Instead, Americans have seen prices at the pump this year below those in 2015. EIA:

The U.S. average regular gasoline retail price dropped one cent from the previous week to $2.15 per gallon on August 8, down 48 cents from the same time last year. …  The U.S. average diesel fuel price fell by three cents for the second consecutive week to $2.32 per gallon, down 30 cents from the same time last year.

pump

EIA expects more of the same. Administrator Adam Sieminski, in remarks accompanying the agency’s latest Short-Term Energy Outlook:

“U.S. retail gasoline prices are expected to continue falling through the end of 2016, even though gasoline demand this year is expected to be the highest ever. … The average pump price for December is on track to be the lowest for the month in eight years. … Gasoline retail prices are down this year because of a combination of modest crude oil prices and abundant supplies of gasoline from high levels of refinery production.”

Looking back, the weight of scholarship and analysis had predicted that, rather than cause higher pump prices here at home as some claimed, exporting domestic crude would put downward pressure on U.S. gasoline prices. In fact, that’s what we’re seeing – abundant crude oil supply benefiting American consumers. U.S. crude exports are part of that market dynamic – while also helping to support domestic production and strengthening America’s balance of trade.

By Mark Green 

Originally posted September 9, 2016

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