(Robert Campbell is a Reuters market analyst. The views
expressed are his own)
By Robert Campbell
NEW YORK, March 12 America's periodic
gasoline price debate is usually a mix of willful ignorance and
cynicism that achieves little but oil executives must be hoping
the latest episode dies down before the United States' massive
fuel exports get much attention.
After all, exports of diesel fuel, and increasingly
gasoline, are now crucial profit centers for many U.S.
refineries, hard pressed by shrinking domestic demand.
As long as the export trade was concentrated in diesel,
refiners were relatively shielded from populist ire by the fact
that few consumers buy diesel fuel regularly.
But with exports of gasoline reaching nearly 650,000 barrels
per day in December, or more than the combined consumption of
drivers in the states of New York and New Jersey, the situation
may soon get less comfortable.
Whether or not the industry is prepared for the inevitable
backlash that will come when these figures are discussed in
public is unknown.
But this debate will have profound implications, not only
for global refined product balances, but also for the way North
America will handle its emerging bounty of light sweet crude
To be sure, refiners will doubtless argue that some of the
gasoline they export is of a lower quality than can legally be
sold in the United States.
They may also point out that limiting exports could simply
prompt refiners to reduce the amount of oil they process rather
than sell gasoline into the domestic market.
In both cases, they may well be right but these talking
points are hardly calculated to win over irate consumers and
politicians bidding for cheap electoral points.
Even if countless investigations have failed to turn up
evidence of collusion in U.S. fuel markets, popular suspicion
about the oil industry will be easy to fan.
CRUDE OIL EXPORTS
For now, refined products offer U.S. oil companies an easy
way around tight federal restrictions on crude oil exports.
Companies shipping refined products abroad still need an
export license but the rules make it clear that these are to be
granted as a matter of course.
While the United States was a major importer of refined
products, the impact of this loophole on the local market was at
It also helped U.S. refineries offload oil products unwanted
on the local market, such as residual fuel and off specification
More recently, the United States' exports have probably
restrained some of the recent increase in global crude oil
prices by avoiding a repeat of the scenario seen in 2008, when
tight refining capacity was a major culprit behind surging oil
By allowing the sophisticated refineries of the Gulf Coast
to meet international demand, the world has so far avoided the
surge in refined product prices that would be needed to allow
simple refineries to replicate their output.
Indeed, any step to take the United States out of the oil
product export market in a bid to cut domestic fuel prices would
probably backfire for this very reason.
But of course, this is no guarantee that U.S. politicians
will not try it given their lengthy track record of misguided
attempts to shape the oil market to their satisfaction.
Here is where the risks to oil exports are starting to
Although an attempt to ban the use of the proposed Keystone
XL oil pipeline to support exports was defeated in the U.S.
Senate last week, the issue is slowly gaining political
While controls on exports are far from the mainstream policy
discussion, the speed at which opponents of the Keystone XL
pipeline were able to seize control of the agenda should be
borne in mind.
(Editing by Marguerita Choy)