The Myth that the US will Soon Become an Oil Exporter

Countries trade crude oil and oil products back and forth. When all of these transactions are netted out, is the US close to becoming a “net” oil exporter?

With the recent increase in oil production (perhaps even exceeding that of Russia on a “barrels-per-day” basis), a person might think that US oil production problems are behind us. If we look at the data, though, it is very clear that the US is still a long way from becoming a net oil exporter.

There are several reasons for confusion. One is the fact that excess refinery capacity can lead to the ability to export both gasoline and diesel, even though the United States continues to import large amounts of crude oil. Another is that tight oil (extracted through “fracking”) is growing from a small base, but can’t necessarily ramp up very far, very quickly. Another source of confusion is with respect to how different types of liquids should be combined for comparison purposes.

In this post, I would like to explain why the idea that the US is about to become a net oil exporter is simply a myth. 

1. On what basis does the US Energy Information Administration (EIA) make forecasts of oil and other energy supplies?

When the EIA makes forecasts of oil and other supplies, as in its recently issued Annual Energy Outlook, Early Release 2012, it looks at future consumption and future supplies in terms of the amount of energy supplied in Btus. In doing this calculation, oil is combined with natural gas liquids. Biofuels (which in the case of the US are almost entirely corn ethanol) are treated separately, as part of “renewables”.

It seems to me that the EIA’s approach is about the only reasonable way of making comparisons, since it is energy value, and not volume (barrels-of-oil per day), that is important. Furthermore, if we are talking about oil imports and exports, we want to know about oil, perhaps including natural gas liquids (which are sort of like oil) by itself. Biofuels are a separate issue.

2. Where are we now, relative to being an oil exporter?

On a Btu basis, the US imported 58% of the oil it consumed in 2011. This percentage is down from a high of 67% in 2005 and 2006, but it is still very high.

Figure 1. US oil imports as a percentage of the oil consumed in the US - calculated using EIA Btu amounts for oil and natural gas liquids.

If the US wants to become an oil exporter, it must first get its imports down from 58% to 0%, and then ramp up production by enough to have oil to export as well.

3. What does the US Energy Information Administration (EIA) forecast regarding oil imports/exports?

In EIA’s Annual Energy Outlook 2012 Early Release, EIA gives the following forecast to 2035. (2010 and prior data are actual amounts.)

Figure 2. Comparison of forecast oil production (AEO Figure 12) and forecast oil consumption (AEO Figure 8), based on EIA's AEO 2012 Early Release.

We can use the forecast in Figure 2 to create a graph similar to Figure 1, but with the EIA’s forecast included. Such a graph is shown as Figure 3 below.

Figure 3. AEO 2012 Forecast of Percentage of Oil Btus Imported

This graph indicates that while percentage of oil imported will drop a little (from 58% down to about 50% or 51%), the United States will not become an oil exporter before 2035.

4. How about if we make our own forecast regarding when we will become a net oil exporter, based on how consumption and production have been trending recently?

Yes, we can do this. I do this in Figure 4, below.

Figure 4. US oil production and consumption, based on recent trends. Historical data form EIA. Trends selected by author.

Based on this approach, if the US could keep up the current trend, we would become an oil exporter in 2028, which is 16 years from now. This result is better than the EIA’s forecast, but is still a long ways away.

5. Isn’t the production of tight oil, obtained by “fracking,” doing very well?

Yes, it is. According to the EIA’s This Week in Petroleum,  a graph of tight oil production by play is as shown in Figure 5, below. Tight oil is the oil that is typically extracted by horizontal drilling and hydraulic fracturing. It comes from shale and other very-low-permeability rocks.

Figure 5. Tight oil production by play, from the EIA's publication, "This Week in Petroleum," March 14, 2012.

This graphic indicates that tight oil provided about 850,000 barrels a day of oil, as of November 2011. The United States consumes a little under 19 million barrels a day–lets say 18.5 million barrels a day.   The 850,000 barrels a day of tight oil amounts to a little less than 5% of the 18.5 million barrels a day we consume, so is only a small fraction of what we use today.

If we look at a graph of recent US crude oil production by area, this is what it looks like:

Figure 6. US crude oil production by area, based on EIA data.

Bakken tight oil is in North Dakota, which corresponds to the purple area in Figure 6 above. The Eagle Ford play (as well as some of the smaller plays) are in Texas, which is shown in red. At the same time these two sources of production increased, deepwater production decreased, so the total increase in US crude oil production was less than the increase in tight oil production.

We have a long-term problem with declining oil production on older fields (illustrated in Figure 6), so we can expect that such declines will continue. As a result, whatever new production we gain from tight oil or other new sources is likely to be offset by declines elsewhere. It is only to the extent that new production is greater than these declines that overall US production will rise.

6. Can’t we just keep ramping up the tight oil production, by drilling more?

We can probably ramp up production by drilling some more wells, but at some point we start running into limits of suitable horizontal drilling rigs and of trained workers.

Figure 7. EIA exhibit of rig counts by orientation, based on Baker-Hughes data. Exhibit from This Week in Petroleum, March 14, 2012.

The figure above shows that there has been a big shift in use of drilling rigs from gas to oil. Current Baker Hughes data shows that as of April 13, 2012, 32% of drilling rigs (vertical and horizontal combined) were gas and 68% were oil.  At some point not too far in the future, we end up being maxed out on how many horizontal drilling rigs can reasonably be transferred from gas to oil. More horizontal drilling rigs can be built, but this takes time and investment capital.

One characteristic of wells in tight formations is that production starts out very high, and then drops off quickly. Because of this, it is necessary to keep drilling new wells, or total production in an area is likely to drop off very quickly. New fracking techniques may help make the drop-off problem less severe, but it is hard to imagine that it will go away completely. If we want production to keep rising, this means that we are likely to need more and more horizontal drilling rigs, more and more fracking equipment, and more and more capital. These considerations help put a lid on how quickly and how high production can be ramped up.

7. How much tight oil does the EIA forecast can be extracted?

Figure 8. The brown layer on top represents the EIA's forecast of future tight oil production. Graph by EIA, from AEO 2012.

The EIA forecasts that tight oil will max out at 1,325,000 barrels a day in 2030. The EIA does not have a good track record of foreseeing changes before they happen, and the chart above shows production already at 850,000 barrels a day. Suppose the US really produces five times as much as the EIA forecasts, or 6,625,000 barrels a day. This increase will still not be enough to cause the US to become a net oil exporter, especially if other sources of oil continue to decline. (This is not to say that I think that production can really be ramped up this much. We would likely run into a number of bottlenecks before reaching this volume–drilling rigs, workers, fracking equipment, capital, etc.)

8. Haven’t we been reading about exporting gasoline and other oil products recently? Does’t that mean we are becoming a net oil exporter?

Yes, indeed, we are exporting gasoline and other oil products to a greater extent than we have in the past.  But we continue to import crude oil, so, on balance, we are still a net oil importer.1

What has happened is that we have continued to add to our refinery capacity:

Figure 9. Operable crude oil refinery capacity. Chart by EIA.

At the same time, we have reduced our own need for gasoline and other products. One of the ways we have done this is by ramping up corn ethanol production. We are now producing so much ethanol that we are exporting some of it (Figure 10, below).

Figure 10. US Biofuels (nearly all ethanol) production and consumption, based on EIA data.

The other way consumption has been reduced by reducing the miles driven per capita (Figure 11, below).

Figure 11. US miles driven per capita, calculated by dividing Federal Highway Administration estimates of vehicle miles traveled (both cars and trucks) by US population.

The peak year for vehicle miles traveled per person was the year ended January 2006. (All of the data in the chart is for years ended January 20xx.) Since then, per capita vehicle miles driven have dropped each year, and are now 7.2% below their peak.

Total miles driven for the entire US population has also dropped. The peak year for total vehicle miles driven was the year ended January, 2008.

There may be other changes that affected oil use, but I don’t have data for them. For example, transferring heavy industry offshore would tend to reduce oil use; an increase in average miles per gallon for vehicles on the road would also tend to reduce oil use.

The net effect of all of the changes is that US oil consumption is down significantly since its high point in 2005. Figure 12, below,  shows an enlarged view of recent oil consumption.

Figure 12. Recent US oil consumption, in Btus. Amounts graphed are the same as are shown in Figure 4 above.

A  comparison of Figures 9 and 12 shows that refinery capacity was increasing at the same time that US oil consumption was decreasing. If we have more refinery space than we need, refiners can import crude oil, refine it, and sell the products as exports. That is pretty much what has been happening recently.

A few things have happened in the past few years that have made US refinery capacity especially attractive:

1. The US has a good supply of “complex” refineries that can process heavy sour crude oil. There is relatively more heavy sour crude being produced now, than previously, raising demand for these refineries.

2. The US has a low price for natural gas, compared to the rest of the world. Natural gas is used in refining heavy, sour crude oil, so our cost of refining has been relatively lower than other locations with similar facilities.

3. The amount of sulfur that is permitted in diesel and other fuel is being regulated in the US and elsewhere, to control pollution. If a country wants to have at least some fuel that meets international regulations, it now needs to find a refinery with complex capacity to remove the sulphur from its crude oil. Many countries do not have such refineries of their own. For example, Mexico sends us oil to refine, and we send oil products back to Mexico.

9. Why do I keep reading so much about “barrels of liquids,” when talking about US oil supply? 

The US government likes to talk about “barrels of liquids” because comparisons with other countries are more favorable on this basis than they are using Btus, or considering crude oil only. If we look at a breakdown of US “liquids” production through 2011, this is what we see:

Figure 13. US oil and other liquids production, based on EIA data.

I noted above that US oil consumption is approximately 18.5 million barrels a day. If  liquids production is about 10 million barrels a day (shown in Figure 13 above), then a comparison of production on this basis would leave a shortfall of “only” a little more than 8 million barrels a day. So even on this basis, we are still a long way from being a net oil exporter.

The problem in making a comparison on a volume (barrels-per-day) basis is that very dissimilar liquids are being combined.  Both NGPLs (natural gas plant liquids) and “other liquids” (mostly ethanol) have only 60% to 70% of the energy content of crude oil. It is doubtful that “refinery gain” adds much energy content at all. The EIA has made adjustments for differences in energy values in its calculations on a Btu basis.

For those interested in finding data on a Btu basis, the Total Energy  section of EIA reports gives data on this basis. They are also available (with a lag) in International Energy Statistics.


1. It is easy to confuse “net oil exporter” with “net oil product exporter”. We can think of net oil exports as the combination of the following four items:

a. Crude oil imports
b. Crude oil exports (virtually zero in the case of the US)
c. Oil product imports (like gasoline and diesel)
d. Oil product exports (like gasoline and diesel)

Net product exports reflect only the combination of Items c and d, omitting consideration of Items a and b.

In 2011, the US became a net oil product exporter. This means that when Items c and d were combined (in other words, omitting consideration of crude oil imports), we exported more oil products than we imported. This situation can happen very easily, if we are importing a lot of crude oil, and have excess refinery capacity.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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50 Responses to The Myth that the US will Soon Become an Oil Exporter

  1. Reblogged this on Worthington Sawtelle LLC and commented:
    Another terrific article by Gail.

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    • Thanks!Interesting post. I know it is the little guys that produce the natural gas. I expect it is also the little guys producing oil in the Bakken and in Eagle Ford. I would have to think about what I could add to what he is saying. The US is indeed doing well, in both oil and natural gas. If the rest of the world were doing anywhere near as well, we would not have energy problems (perhaps CO2 problems, but that is the tradeoff). Also, problems trying how to match natural gas uses to availability, and to keep adding to infrastructure.There are a lot of things I don’t understand–for example, how economic can it be to build natural gas pipelines, where there is only a bit of natural gas per well, and it may only be produced for few years before depletion sets in?

  3. I like this gem from Rockmann. Could it be expanded into a dedicated post at OFW or TOD?

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  6. Ed Boyle says:

    c and d, right got it. They had me a little ocnfused in the press with their blather although I knew it was impossible as USA uses so much. Hype as usual. Thanks for the simple explanation of complicated matters.

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  8. pjc says:

    I’m not sure why you would look at just the US and not include Canada.

    The Canadien and American economies are pretty closely intertwined.

    American + Canadien oil self sufficiency appears likely within 5 years or so.

    Of course, this all ignores coal, which the US is starting to export in significant quantities.

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  10. La Curée says:

    Gail one of your graphs in creative commons action.

  11. jamesneo says:

    Hi David Harney, i agree with your viewpoint completely as we are at the point whereby the three factors of peak resources(oil first then coal or gas), peak debt and climate catastrophe( peak food and peak land) are racing against each other to see who will win the race. Because this three are also linked trying to solve one might aggravate the other two similar to the scenarios in LTG whereby only if we try to tackle all three problems together can we at least has a greater chance to muddle through. Unfortunately most people do not have the solution to tackle all three together and some even suggested causing one of them to “save the other”, for example purposely accelerating peak oil or economic collapse to prevent climate catastrophe which will be counterproductive. My view is that probably 2030-2040 will be the final nail in the coffin with one or two of them arriving in the 2020s if nothing is done to at least mitigate some of the effects by the end of this decade.

  12. David Harney says:

    I suspect that the recent Time Magazine article on oil is a pretty good predictor of how things will play out for the next decade or so. We will employ every means possible to dig up every type of FF that will keep BAU running – regardless of the environmental cost or the degradation of our quality of life. We are a car culture and nothing else matters as long as we can put gas in the tank.

    I know that many in the PO community have discounted GW because they felt that the supply of oil would be exhausted before the GHG concentration was critical. I never agreed with that POV. I see our predicament as Peak Everything caused primarily by human population overshoot. It is totally uncertain as to what factor (or combination) will precipitate varying degrees of collapse in various parts of the planet. It may be rising seas and violent storms; it might be a pandemic; it might be financial in nature; it might be war over resources; it might be something else. It might happen in a decade or several decades. What is pretty easy to predict is that our current paradigm of population increase combined with our car culture (and related consumption) is unsustainable. It is also pretty easy to predict that humans will not collectively craft and execute a plan to prevent collapse. Perhaps the collapse will be a “Slow Descent”, a “Long Emergency”, or something much more violent and sudden. What is almost certain is that the end of this century will not feature a happy home for 10+ billion humans with DuPont providing Better “Things for Better Living…Through Chemistry.” (or their later slogan “The miracles of science”.)

    • Justin Nigh says:


      I agree with your summary. Our recently elected state Premier has been quoted as saying we will continue to drive vehicles if it means “burning carpets and tires” to do so. It’s this viewpoint of continuing BAU by whatever means necessary without any consideration for adjusting behaviour that has caused me to abandon all hope for any resolution to the looming crises. The arrogance and cockiness of our culture will probably be it’s undoing.

    • If we look forward 100 or 200 years, I am pretty sure you are right. Maybe it is just as well that we don’t know exactly how we get there.

  13. DepressedNorwegian says:

    I’m in Norway. I’ve known of peak oil for many years, but recently perused the web in more detail regarding our prospects for a post-hydrocarbon society.

    I wasn’t even aware that Norway passed its peak already in 2001, and we’re now only producing 2/3 (2 million bopd instead of 3). The decline has been stark, but it seems to be idiosyncractic for the North Sea.

    Anyway, being 23 and a soon-to-be graduate of Computer Science has left me utterly depressed. I’ve been depressed for many of the years prior to when peak oil and the actual uses of oil were made aware to me, but this has been the final straw that may undo me (maybe it’ll be good for the planet).

    There’s no future for my profession, and I wish dearly I had ventured into something useful, like carpentry or farming. We’re only 50% self-sufficient in Norway. At current depletion and discovery rates, we may be net importers again in a mere 10 years (supposing anyone has something to offer the market and us).

    What’s the point? If I try to read up on farming, survival skills and the like, it may postpone my death by a year. Getting into mortgages at the moment seems dicey, especially since Norway’s housing bubble may very well burst soon. And kids? No way. No way am I bringing anyone into this world that may.

    Fellow Norwegians are unbeknownst to this issue by and large. Maybe some 0,1% are aware of the perils of this and the following decades. Nobody wants to listen either, and I feel lost in my culture. Enjoy the $2/litre gasoline while it lasts I say, “you may look back and remember it as good times”, but all I get is startled, angry comments.

    Wish I had been aware sooner, I can’t make any impact to furthering my life at this point.

    (Seems like I used the contact form, disregard it, Gail)

    • La Curée says:

      Never say die, Norwegian blue.
      Death is coming for us all you have to do is try to delay him, forget about angst.
      We are a bit of a self selecting group, others realise but prefer to keep their head down as a survival strategy.
      You will find like minded people on the web.
      Just remember everyone has an agenda and some of them work for the US government.
      ‘Reg: If you want to join the People’s Front of Judea, you have to really hate the Romans.
      Brian: I do!
      Reg: Oh yeah, how much?
      Brian: A lot!
      Reg: Right, you’re in.’
      Reg: Right, you’re in.

    • My ancestry is Norwegian, as you may guess from the name Tverberg. Norway was having trouble feeding its population back in the early 1900s when my grandparents came to this country. Fossil fuels helped cover up the overshoot problem for a while, but the problem will be coming back, and this time there is no “new world” to migrate to.

      I am not sure computer science is all that bad choice right now. My husband teaches computer science, and I have two sons who are programmers. As long as things hold together, computer science seems at least as good as average as a profession. Norway, with its oil, is doing better than a lot of countries. It at least has something to trade for food, for the next few years. It also has a lot of hydroelectric power.

      I think we are all pretty much in the same boat long term, regardless choice of profession. Even farmers are not necessarily that much better off, partly because today’s techniques are less likely to work in the future, and partly because there will be enough hungry non-farmers who are envious. Our problem is that we have overshot the carrying capacity of the world.

      For now, we can enjoy what we have. We can help make life more pleasant for family members and friends. We can educate ourselves. I am in a location where it is possible to plant a few trees that will provide nuts and fruit, so I am doing that.

      I don’t think very many people anywhere really are aware of the issues, or want to talk about them. If there were something that we could do that would really fix the situation, it would make more sense to educate everyone and demand that everyone work on fixing it. But it is not clear that we really can fix the situation. I don’t think that lots of wind turbines, or higher carbon taxes, or lots of electric cars will solve our problems.

      So it seems to me that we need to do the best we can with the time we have. Perhaps things will really turn out better than we think, or the timing will be delayed. I think we need to go on living our lives, regardless.

    • Hej says:

      The really sad part for Norway is that you are converting hard assets (oil) to paper store of value (shares, bonds, etc.) that will probably be worthless soon. If I was Norway I would IMMEDIATELY stop extracting and force/help the citizens to transition (with the help of the soon to be worthless paper money) to a more sustainable lifestyle (reduce garbage collection, impose HUGE taxes on any transportation using finite resources etc.)

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  15. james(migloo)graham says:

    Gail thank you for this Time magazine also recently did a peice on oil April 9th. 2012 “cheap oil may be gone forever.”

  16. Nicolai Mathiasen says:

    Hi Dear Gail.

    Thanks for this article – you are a hero in my worldview for doing these fantastic articles-

    I was wondering if it would be possible to overlay the % of exploited resources on the bakken and similar resources on the graph showing the extraction from the same?

    I.e. The figure 2 graph could be more interesting if it also showed how many % of the resource that has/are been/being exploited to reach the current production level – show on the same graph to ease the connection between the two.

    • I don’t think we really know the percentage of the resource that has been extracted. In all of these areas, there is a huge, huge quantity of oil theoretically available. Improvements in technology allow us to get a few percent of this oil out, but this percent may increase with improved technology. If technological improvements occur, sites that would not be economical for drilling with last year’s technology might be economical with this year’s technology, or next year’s technology. (There are a lot of estimates in this, however. All of the estimates might involve wishful thinking.) I am more optimistic that oil can be economically extracted than dry natural gas using fracking, because oil is a lot more expensive resource to begin with.

  17. So the government says that Fracking is safe – we should believe the government on this sort of important stuff.. right? fracking

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  20. La Curée says:

    Agreed Gail the last graph on this blog shows how the US’s new status as an oil exporter may be due to a reduction in the spending power of the labouring masses.
    Analogous to the tax increases in Europe.
    When it came to negotiating the inflationary environment a debased cost of living index combined with leaving the gold standard left the poor at a greater disadvantage than the managerial class.
    Possibly as they tend to own a greater proportion of inflation benefiting or resistant goods like shares or property combined with a better education.
    What do you think?,_Nearly_50_Below_1973.

    • I think fewer vehicle miles driven, which is related to lower spending power of the masses is part of what is reducing consumption. We are not a true exporter though–just exporting oil products, like gasoline and diesel, because we have excess refinery capacity.

      • La Curée says:

        Yes, a sign of the times the US as a service economy for more efficient manufacturers.

      • Don Stewart says:

        ‘lower spending power of the masses is part of what is reducing consumption’
        What do you think about the article in Energy Bulletin today about young people driving less out of both necessity and preference?

        My own observation in a college town is that: overall traffic is down and there is less congestion which, ironically, permits much more aggressive driving. The aggressive drivers may tend to be middle aged–I can’t really say. A friend has a daughter who is a junior in high school who is in no hurry at all to get a driver’s license. I work with a 25 year old who rides a moped–sometimes for pretty considerable distances. Things are changing…Don Stewart

        • Of my three adult children, only one drives. One lives in Boston, on a bus line, and practically next door to where she works. The other has Asperger’s syndrome, and has never been able to drive. He lives with my husband and me, and works (as a programmer) nearby. He walks to the grocery store and many places.

          Low salaries no doubt enter into quite a few of these decisions. If you are not making a lot of money, it is a lot easier to make ends meet without a car.

  21. jamesneo says:

    If the US economy really collapse i highly doubt the capital will be there to ramp up the expensive process for the tight oil unless US become a third world country that has sold all its land and oil companies to other countries that might have some excess capital. This is especially so if US lost its reserve currency status as any attempt to print money to fund any such extraction will lead to a highly inflationary environment which will hinder the process to raise capital to sustain such endeavors. Moreover, its is likely a significant amount of the oil will become uneconomic to extract and sell in the world market.

    • It seems like the one thing that might help is if somehow the developers of tight oil could make enough money early on from projects that they could fund development costs of future projects. This is traditionally how oil and gas development has been done, but with new types of extraction with very high front-end expenses (and low EROI), this becomes less possible. So I am afraid you may be right.

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  24. Leo Smith says:

    You always come up with something interesting.
    Since I am in the UK, I have no comment beyond ‘thank you’ to make

    So thank you.!

    • In the case of this post, someone wrote me an e-mail, asking questions related to this topic. I had been aware of the topic previously, but that moved me in the direction of writing a post on the subject.

  25. Bicycle Dave says:

    Hi Gail,
    I’m confused about chart 4 – are you actually suggesting that the US might become an net oil exporter in 16 years? Or is this chart just an exercise extending current trends without any other real world considerations?

    Your figure 13 which shows the difference between 18.5 consumption and 10 production makes it hard to understand how these two would meet to qualify the US for net oil exports. I gather from your other comments that you doubt the US will ever be a net exported unless the US economy nearly collapses – and they you would have to ask who else in the world would still be importing oil? If the US tanks, is China still going to be booming?

    • Regarding Chart 4, I am not really suggesting that the US might become a net oil exporter in 16 years (but stranger things are possible, if the US economy collapses). I am more showing that we would have to sustain current trends an awfully long time for things to work out.

      Regarding Figure 13, and what the future will bring, there are a lot of mysteries. I have a hard time seeing how we will maintain shipping oil around the world, unless financial systems and international trade work well. I suppose that some continued bilateral trade is possible–say between China and the US, or Saudi Arabia and the US.

  26. Stu Kautsch says:

    Aha! You always include something that I did not know, and usually make a connection that I did not make. For this I thank you.
    This essay, the connection was the cheap natural gas and the refinement of heavier petroleum. What I did not *know* was that the US has the refineries to take advantage of the connection; I’ll have to do some googling.
    Of course, this does not mean that one of these is close to my house (NJ). In our part of the country, we’re losing refineries, not gaining them.

    • The complex refineries handling heavy oil are in the Midwest and on the Gulf Coast, as I understand the situation. They can buy heavy, sour oil cheaply. When they upgrade it, the cost of the products is still less than that of products that use expensive light sweet oil from Europe or Africa. Refineries on the East Coast are buying high price light sweet oil, and the price of the products they make is too expensive to compete. This is why they are going bankrupt. These refineries may reduce the amount of excess refinery space we have.

      • Stu Kautsch says:

        Gail, thanks for passing this along. It’s very illuminating, and means that petroleum product pricing (and cost structure) has more of a practical link with natural gas pricing than I thought (in the U.S., anyway).
        Of course, most of us are convinced that gas prices will increase over the next couple of years (the rig count is falling almost every week), so the heavy/sour refineries will have to pass their increased costs along to us then. Whew. If we hit $4 this year, we’ll get $5 by the end of 2014.

      • sponia says:

        Would that be the reason why the pipeline from the Canada Tar Sands to Gulf coast refineries is such an issue?

        • The immediate reason the pipelines from the Canadian Tar Sands to the Gulf coast refineries is such an issue is because, as it is, there is a “back-up,” not just of the Canadian tar sands oil, but of a lot of other oil in the Midwest, because of lack of pipeline capacity to the Gulf Coast. Refineries are able to pay less for the oil, and as a result, we pay less for the gasoline and diesel made from the oil (and Midwest refineries make a higher profit margin, and East Coast refineries go bankrupt). The producers of the various types of oil affected have been very unhappy about the situation–they want more money for their oil. Some changes are being made in the very near term, that should fix the situation. I will need to look up the exact details, but one pipeline is being made to flow southward, instead of northward, from Cushing, OK to the Gulf, and there are other changes as well. This should help oil producers of various kinds get more money for their oil, but it will likely raise costs to the consumer.

          There is another issue as well. Canada in the next several years plans to raise the production from the tar sands, and more pipelines, either to export to China, or to send to the US for refining, are needed. The “green” movement is very opposed to a US pipeline being built, and has made a “cause” out of this. They somehow believe that the oil will be left in the ground if they are successful. One issue is that the CO2 impact of the tar sands oil is near the upper end of the range with respect to oil that is being extracted around the world–but still is far better than coal. Bill McKiben has said that building the pipeline is game over for climate. I don’t think building the pipeline makes much difference with respect to whether the tar sands oil will be extracted and used. The ramp up in extraction will be fairly slow regardless.

  27. Andrew in the Bay says:

    But…Obama said we would. Are you saying that Obama can be untruthful?

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