Overseas buyers are depleting domestic oil reserves.
The World Can’t Get Enough U.S. Energy
The Wall Street Journal reports The World Can’t Get Enough U.S. Energy, Keeping Prices High for Americans
For now, the U.S. has been able to meet needs at home and replace some of the missing Gulf barrels. No nation in the world’s history has ever exported as much energy: It shipped 14.2 million barrels of crude and products a day late last month—the rough equivalent of one out of seven barrels consumed globally in ordinary times.
But trouble is brewing. U.S. oil producers are barely stepping up their output, refineries are running at full-throttle, and domestic stocks are getting depleted fast. The upshot: American consumers are set to keep paying more for fuel to stay inside the U.S.’s borders.
“This is all just going to end so badly,” said Matt Smith, director of commodity research at commodities- and shipping-data provider Kpler. “We have to essentially get squeezed to the point where prices move higher to stop the barrels leaving.”
The administration has said it wouldn’t impose a ban on energy exports. Energy Secretary Chris Wright said on CNBC last week that the U.S.’s economic future depends on selling its energy abroad and that this was a top item on the Trump agenda.
“We can’t be a major energy exporter to the world if we decide sometimes to stop exporting our energy,” he said.
The ports of New York, Philadelphia and Albany, N.Y., exported 174,000 barrels a day of gasoline, diesel and other petroleum products last month, according to Kpler. That is 10 times the volumes they shipped over the same period last year. Halfway through May, the pace of exports is even higher, well over 200,000 barrels a day—the highest monthly pace on Kpler’s records since 2017.
The red-hot exports from that region are a sign that refiners on the Gulf Coast are likely running out of dock capacity at loading terminals, said Brian Stetter, director of Americas fuels and refining at S&P Global. It appears companies are sending their barrels up the Colonial Pipeline, a major conduit that transports about 45% of all fuel consumed on the East Coast, he said.
Diesel has been in especially high demand. The U.S. exported some 1.86 million barrels at one point earlier this month, according to the Energy Information Administration, the highest volume ever. The swelling shipments have brought stocks of diesel and other fuels on the Gulf Coast down by nearly 19% from prewar levels, according to the EIA.
American refiners including Marathon Petroleum and Valero VLO say they are cranking out diesel to the hilt. Companies are shipping the fuel to countries that have typically relied on Asia for supplies, such as Australia, whose top supplier before the Iran war had been South Korea. That country can’t access nearly as much Middle Eastern crude to process into diesel as it did before.
It isn’t just transportation fuels that are bleeding out of the U.S. Tankers have swarmed the Gulf Coast to load up on crude. Commercial crude stocks excluding the Strategic Petroleum Reserve fell by 4.3 million barrels in the week ended May 8, according to the EIA. At Cushing, Okla., one of the world’s largest oil-storage facilities, where the U.S. benchmark for oil is set, stocks could fall to levels that complicate operations within the next two months, some analysts say.
If that happens, U.S. oil prices will have to jump to discourage more draws. Crucially, the oil benchmark would likely creep higher than global oil prices, which would discourage foreign buyers, depress exports and make more crude available to domestic markets.
“What you’re seeing is a liquidation of inventory,” said Andy Lipow, president of Lipow Oil Associates in Houston. “The world has been doing it for two months.”
Victory for Whom?
Is this a victory and if so for whom?
I do not support export controls. But nor do I support drawing down strategic oil reserves so that oil companies can have a bigger profit.
Where are all those folks that oil would be back down to $50-$60 2 months after the war started.
Question of the Day
Q: Where are all those folks that oil would be back down to $50-$60 2 months after the war started?
A: Cheering exports silly, because Trump says so.
A Bit of Reality
Clock Is Ticking
You Ain’t Seen Nothin Yet
If Trump resumes the war and Iran responds by hitting Mideast infrastructure, oil prices are going to surge.
The only thing that will cool things down is opening the strait.
I happen to have a musical tribute.
Meanwhile, please note Ground Beef Soars to $6.90 per Pound. Trump Has No Winning Actions
Trump has no winning actions on beef or oil.
The Affordability Meme Takes Over
At some point (hint – right now), it all breaks down.
The prices of everything that includes steel, aluminum, electronics, and beef becomes more than a “small price to pay”.
Consumers get fed up. They blame politicians. Then politicians do what they always do.
Q: What’s that?
A: Blame the other political party, blame price gouging, insist that they know what they are doing, and claim it’s all temporary.
Stupidest War in History
This is one of the stupidest wars in history. Trump did it at the request of Benjamin Netanyahu, Israel’s prime minister, and warmongers like Ted Cruz and Lindsey Graham.
Instead of blaming himself, or Cruz, or Netanyahu, Trump repeats his meme of “small price to pay”.
“I’d make it again,” said Trump when asked about starting the war.
That statement hits every person of common sense in the United States, including farmers. Many farmers now realize Trump sold them a bill of goods over exports, fertilizer, and diesel.
Unfortunately, we ain’t seen nothin yet.
Article posted with permission from Mish Shedlock
