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U.S. to become net exporter of petrol?

U.S. to become net exporter of petrol?

Nelson Ireson August 28th, 2008 Nelson Ireson By Nelson Ireson Author August 28th, 2008
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December 31st, 1969 Abnormal relationships between supply and demand are common in the oil industry for a variety of reasons, including the cartels that control its generation, but this year's rapid price rises have wreaked more havoc than typical on the market. One of the end results is that the constant level of refined fuel output may actually exceed demand in the U.S. by 2010, leading to the net export of petrol. The counter-intuitive result arises in part from the government-mandated push for biofuel production and its use as an additive to petrol, which will offset petrol consumption by 600,000 to 700,000 barrels per day by 2012. That output level is expected to outpace the growth in petrol demand over the same time period due to the rise of more efficient standard vehicles, hybrids and electric cars. Combined with the existing trend toward driving less, consulting firm Booz & Company thinks the U.S. could actually be facing a fuel supply excess rather than a shortage, as early as 2009 or 2010, reports Green Car Congress. An already high capacity for distillation is being continually expanded, as the U.S. is expected to build in another six million barrels per day of capacity by 2012. Coupled with an expected global growth in demand, the excess capacity would eventually be used to produce petrol for export. Potential markets for the exported petrol include China and especially India, where the Tata Nano and similar projects are expected to have a direct effect on global demand levels. Unfortunately, however, the high costs of transporting the fuel to these countries will rapidly take away much of the existing profit margin in the fuel's production.
U.S. to become net exporter of petrol?

U.S. to become net exporter of petrol?

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Abnormal relationships between supply and demand are common in the oil industry for a variety of reasons, including the cartels that control its generation, but this year's rapid price rises have wreaked more havoc than typical on the market. One of the end results is that the constant level of refined fuel output may actually exceed demand in the U.S. by 2010, leading to the net export of petrol.

The counter-intuitive result arises in part from the government-mandated push for biofuel production and its use as an additive to petrol, which will offset petrol consumption by 600,000 to 700,000 barrels per day by 2012. That output level is expected to outpace the growth in petrol demand over the same time period due to the rise of more efficient standard vehicles, hybrids and electric cars.

Combined with the existing trend toward driving less, consulting firm Booz & Company thinks the U.S. could actually be facing a fuel supply excess rather than a shortage, as early as 2009 or 2010, reports Green Car Congress.

An already high capacity for distillation is being continually expanded, as the U.S. is expected to build in another six million barrels per day of capacity by 2012. Coupled with an expected global growth in demand, the excess capacity would eventually be used to produce petrol for export.

Potential markets for the exported petrol include China and especially India, where the Tata Nano and similar projects are expected to have a direct effect on global demand levels. Unfortunately, however, the high costs of transporting the fuel to these countries will rapidly take away much of the existing profit margin in the fuel's production.

Tags: Odds and ends, Industry

Posted in: News


Comments (5 total)

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  1. By mlevere1992 #1, Posted: 8/28/2008

    If we start exporting fuel, shouldn't our fule prices go down to under $2.00? Rules of supply and demand?

  2. By Fred #2, Posted: 8/28/2008

    So how much booze did booz drink when he did this math? Sorry couldn't resist, but really?

  3. By raptor #3, Posted: 8/28/2008

    >>mlevere1992

    Don't worry, eco-nazis will ensure that petrol doesn't fall under 2.00$. If it does, they will tax the living hell out of it.

  4. By Gus #4, Posted: 8/28/2008

    Interesting.
    I know that early in our oil production history we exported oil.
    Thanks to the liberal ecomentalists, now we are at the behest of others...

  5. By Anataxis #5, Posted: 8/28/2008

    Booz Allen Hamiton, now Booz has a very prestigeous reputation in the consulting world, or so I was told when I interviewed with them the last half of last year and the first half of this one.

    After dealing with them for almost 9 months, I can say without reservation that they are the single most incompetent firm that I have ever dealt with. I don't know that I would trust their anaysis after seeing how the corporation works- on many levels might I add. This isn't a grudge or anything either, when the interum head of my department found out what had happened and their I deare-say unprofessional behavior, she was very unhappy and went so far as to state that if she had anything to do with it they would not be returning to interview again.

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