Gaming the energy system for profits
Oil and gas industry uses deceptive energy independence message to push U.S. exports
by Kurt Cobb, Resource Insights
With gasoline scaling $4 a gallon recently, plans announced last week by international oil giant BP to export U.S.-produced crude oil ought to have Americans howling. For such a plan to be good energy policy--rather than merely profitable for the oil industry--the United States would have to be producing more than enough oil to meet its own needs. But the country produces nowhere near that amount. Nevertheless, the industry's deceptive campaign to make the public and policymakers believe that the United States is on the verge of energy independence seems to be succeeding--a push that is really just a smokescreen for selling the country's oil and natural gas to the highest bidder.
So far this year the United States has produced 6.2 million barrels per day (mbpd) of crude oil plus lease condensate (which is the definition of oil) versus daily net consumption of 13.6 mbpd of finished petroleum products. The country is a long way from being free of oil imports, and as I'll discuss below, there is no realistic prospect that we'll ever produce enough oil domestically to satisfy our needs at the current level of consumption.
That's why to date, except for minor sporadic shipments to a few countries and regular small shipments across the Canadian border, the U.S. government has allowed no other domestic crude oil to be exported. The BP request is presumed to be an attempt to bring oil produced in North Dakota to Canada's refineries on its east coast. The oil produced in North Dakota trades at a $20 discount to oil currently being imported from Europe by Canadian refineries.
Analysts believe BP can ship the North Dakota oil by railcar or other means to Canada and beat the European price. All things being equal that would tend to raise the crude oil price in the United States. The irony, of course, is that Canada exports much of its crude oil production to the United States, making it America's single largest supplier of imported oil. Nevertheless, differences in oil quality and oil transportation infrastructure appear to favor what BP is proposing.
by Kurt Cobb, Resource Insights
With gasoline scaling $4 a gallon recently, plans announced last week by international oil giant BP to export U.S.-produced crude oil ought to have Americans howling. For such a plan to be good energy policy--rather than merely profitable for the oil industry--the United States would have to be producing more than enough oil to meet its own needs. But the country produces nowhere near that amount. Nevertheless, the industry's deceptive campaign to make the public and policymakers believe that the United States is on the verge of energy independence seems to be succeeding--a push that is really just a smokescreen for selling the country's oil and natural gas to the highest bidder.
So far this year the United States has produced 6.2 million barrels per day (mbpd) of crude oil plus lease condensate (which is the definition of oil) versus daily net consumption of 13.6 mbpd of finished petroleum products. The country is a long way from being free of oil imports, and as I'll discuss below, there is no realistic prospect that we'll ever produce enough oil domestically to satisfy our needs at the current level of consumption.
That's why to date, except for minor sporadic shipments to a few countries and regular small shipments across the Canadian border, the U.S. government has allowed no other domestic crude oil to be exported. The BP request is presumed to be an attempt to bring oil produced in North Dakota to Canada's refineries on its east coast. The oil produced in North Dakota trades at a $20 discount to oil currently being imported from Europe by Canadian refineries.
Analysts believe BP can ship the North Dakota oil by railcar or other means to Canada and beat the European price. All things being equal that would tend to raise the crude oil price in the United States. The irony, of course, is that Canada exports much of its crude oil production to the United States, making it America's single largest supplier of imported oil. Nevertheless, differences in oil quality and oil transportation infrastructure appear to favor what BP is proposing.
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