If you are old enough to recall the 1970s, you remember when Americans lined up at gas pumps, and stations closed after a few hours of business when their tanks ran dry.
For us old-timers, who can look back on those times, it may come as a bit of a shock to learn that this year, for the first time in many decades, the United States may end up as a net exporter of gasoline.
During this past September, the U.S. exported 430,000 more barrels of gasoline a day than it imported. Experts expect the trend to continue for the balance of the year, creating a trade surplus for 2011 overall.
This is good news for the country because the rise in gasoline exports is part of an overall movement toward a more stable trade balance. From the second quarter to the third quarter of this year, the trade gap narrowed 7.3 percent to a deficit of $135.6 billion. The country’s total current-account deficit for the quarter was the lowest it has been in two years.
A major factor in the rise of gasoline exports has been falling domestic demand. Gasoline consumption has dropped about 8 percent since its peak in 2007, from 9.6 million barrels a day to 8.8 million barrels a day. In part this decline has been due to the recession, but there are other forces at play as well. Americans are driving more fuel-efficient cars. Around 70 percent of the nation’s gasoline supply is now blended with ethanol, according to the American Coalition for Ethanol, a trade group. And, because of high gas prices, more people have turned to other means of transportation, including buses, which are usually powered by diesel and sometimes by natural gas or electricity, but almost never by gasoline. In the first nine months of this year, Americans collectively took the bus 130 million more times than in the same period of 2010, a 2 percent increase.
The availability of American-refined gasoline for export is also connected to the ongoing natural gas supply glut. Stored inventories of natural gas now appear set to exceed last year’s record, keeping prices at rock bottom. In response, many homeowners, particularly in the Northeast, have switched from oil heat to natural gas. That, in turn, frees up more oil to be used as diesel fuel, making diesel more cost-competitive with gasoline. As some American drivers have switched to diesel-powered vehicles, refineries have been left with more gasoline to sell elsewhere. If this trend continues, it is possible that some makers of hybrid cars will start marrying their battery technology to diesel-powered, rather than gasoline-fueled, engines, which would further increase the gasoline surplus.
But since our national economic policy seems to favor preventing growth at every turn, there is already speculation that politicians may put an artificial end to the gasoline trade surplus. The problem is that American drivers (read voters) don’t like paying high gasoline prices based on global markets when they know their own country is producing a surplus. Tom Kloza, chief oil analyst at the Oil Price Information Service, told CNN Money he expects politicians to raise the idea of export restrictions, which would force refineries to keep more of their gasoline here in order to bring down prices for American drivers.
I drive quite a bit, probably more than the average American. And I don’t like paying high prices for gas any more than anyone else. But I have no desire for the government to subsidize my gasoline consumption by interfering with exports.
By forcing American refineries to focus on a market where there is not much demand for their products, we would succeed only in sabotaging one of our own industries just as it is starting to provide us with a valuable trade asset. If restrictions were imposed, refiners would stop investing in improvements and expansion to U.S. refineries and, instead, would direct their investments to offshore plants, ultimately taking jobs with them. Export restrictions would also short-circuit the natural supply and demand forces powering the movement toward hybrid vehicles. This would put an end to a trend that, in the long term, promises to help us use our energy more efficiently.
We need our politicians to accept the gasoline trade surplus as the good thing it is and resist driving progress away on artificially cheap gas.
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