Gas & Other Fuels Are Our Most Valuable Export

Crude Oil Refineries on the East Coast, such as this one (ConocoPhillips, NJ) are Too Expensive to Run

Did you know that our most valuable export is of refined petroleum products such as diesel, gasoline and jet fuel?? That won’t continue, however, because we are not building refineries. It’s very unfortunate because this is an export that could mean money and jobs for our economy.

Our becoming a net fuel exporter is actually a plus in the EPA regulations column, but it’s the EPA of 2001.

In 2001, the EPA issued a new rule that reduced the amount of sulfur allowed in highway diesel fuel by 97%, from 500 parts per million to just 15. Part of the regulations, which went into effect in 2006, forced refineries to begin producing more of the cleaner diesel. In response, oil refiners spent billions updating their plants with the necessary equipment, adding roughly 37% more desulferization capacity.

As a result, U.S. refiners now make a product that’s more ready for the global marketplace. That’s a double-edged sword domestically. It’s great for the country’s trade balance. But as Reuters noted as far back as 2008, its also made fuel more expensive here at home. “Before the diesel mandate, much of the diesel produce in the United States fell far short of European fuel specifications, which mean the fuel tended to stay in the United States, keeping stockpiles full and prices low,” the wire explained.  The Atlantic

In 2011, demand for the products in the U.S. went down due to more efficient vehicles and the slow economy so refiners began to look for other places to make money, thus the exports increased.

It is not simply a matter of cleaner fuel resulting from EPA regulations that led to money being poured into rebuilding and cleaning up old refineries. The refineries had to expand to make up for the fact that none were being built.

The EPA of today however is not the EPA of 2001 and they are going well beyond what is needed or required. The Clean Air Act is leveling stricter and stricter standards with no end in sight. The EPA is forcing the closures of refineries.

It wouldn’t be so much of a two-edged sword, as The Atlantic piece mentions, if we would BUILD MORE REFINERIES! We cannot do that however, because we need to drill for oil to make the cost of the refineries worthwhile. The gas refineries rely on crude and the costs of refining are too high because there isn’t enough inexpensive crude oil.

Over the past two years, five U.S. refineries have been permanently shut or indefinitely idled, cutting U.S. refining capacity by 294,300 bpd to 16.9 million bpd. We haven’t built new ones since 1976.

The gap between consumption and capacity continues to grow.

Why aren’t we then building refineries so we can make more money with this export and put more people to work? Thank the EPA. We need to drill and we need to build refineries but there is no way to get around the government morass.

You might wonder why gas prices are so high if we have enough for ourselves and others. Partly it’s because it’s being shipped out and we have less supply here. The EPA lovers like to say that gas prices are high because it’s the cost of making the energy cleaner, which is true in part, but what they fail to tell you is gas prices are high in large part due to the enormous taxes levied by both the federal and state governments.