U.S. oil refiners see gasoline and diesel exports threatened amid government price concerns

U.S. oil refiners that provide the bulk of the nation’s consumption of about 8.8 million barrels per day (bpd) of gasoline and nearly four million bpd of diesel, as well as shipments to areas outside foreigners who have become increasingly dependent on U.S.-made fuels, said in October 2022 they were concerned about an export ban.

American Fuel and Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API) said on October 4 that US President Joe Biden could restrict or even ban fuel exports. The comments coincided with one of the biggest fuel price volatility since the start of the Russian-Ukrainian war.

Average consumer gasoline prices in the United States increased in early fall 2022 compared to the previous week, month and year.

The increase in fuel prices in the United States follows a decision by the Organization of the Petroleum Exporting Countries (OPEC) to cut supplies by two million barrels per day. World consumption has been around 100 million barrels per day in recent years.

Fuel Export Ban Concerns
AFPM President and CEO Chet Thompson and API President and CEO Mike Sommers wrote on October 4 to US Energy Secretary Jennifer Granholm expressing significant concerns” regarding a possible fuel export ban.

Banning or limiting exports of refined products can “reduce inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate U.S. wartime allies,” they wrote. Thompson and Sommers, according to the release.

The United States exports energy to multiple regions of the world that have become dependent, such as Europe or much of Latin America.

Of the estimated total refining capacity of 18 million barrels per day in the United States, about 3.5 million barrels per day of gasoline, diesel and other refined products are exported, U.S. refiners said.
“Crude oil acquisition costs from refiners were nearly 60% of the retail price at the gas pump in 2022, according to the EIA,” they said.

Refiner Earnings
Energy Secretary Granholm referred Sept. 30 to refiner profitability.

“This week’s letter from a company that made nearly $200 million in profits every day last quarter misinterprets where we are. The fact is, energy companies are making record profits, with refiners and retailers also posting well above average margins while passing the costs on to consumers,” according to the DOE.

On July 29, 2022, Exxon Mobil Corp. posted a profit of $17.9 billion in the second quarter of 2022. The figure earned by the Irving, Texas-based company, when divided into 90 days which roughly represent the length of a quarterly period, translates by a rounded daily profit of $200 million.

“Currently, the average wholesale retail profit margin is around $1.27, compared to the typical 90 cents for this time of year. This price dynamic is possible due to ongoing refining problems and the inability of companies to maintain sufficient regional inventories to cushion demand when refineries are out of service, while these same companies export gasoline and diesel. at record highs,” he added.

“If companies like ExxonMobil continue to believe that ‘free market incentives remain the most effective way for industry to solve these problems,’ they need to step up and show results for American consumers and the American economy,” did he declare.

Soaring fuel prices
As of Oct. 6, there were weekly gasoline price increases, particularly on the West Coast and Midwest, in part due to supply issues amid high gasoline demand, according to the American Automotive Association.

The organization said the national average for a gallon of regular gasoline in the United States as of October 10 was closer to $3.92 a gallon, an increase of 12 cents from the previous week, 19 cents higher than a month earlier and 65 cents more than a year earlier.

That compared to around $4.85 a gallon at the start of June, when prices were approaching the highs for the year they hit later.

Fuel prices in the United States normally decline around October for seasonal reasons including changes in the fuel mix and also as the higher fuel demand for summer driving normally slows.

US motor gasoline imports in the week to October 6 averaged 480,000 bpd. During the same period, the United States also imported 81,000 bpd of distillate fuels and exported 796,000 bpd of finished gasoline. and 1,656,000 bpd of distillates, according to GasBuddy, a news and analysis organization which in turn cited the Energy Information Administration (EIA).

In total, US companies exported 10.6 million barrels a day of petroleum and petroleum products, according to data released by GasBuddy and based on data from government agencies.

The role of OPEC
The 45th meeting of the Joint Ministerial Monitoring Committee and the 33rd OPEC and non-OPEC ministerial meeting took place on October 5 in Vienna when a decision was taken to cut supplies by two million barrels per day.

On Sept. 26, first-month Brent crude oil futures were trading below $83 a barrel. As of October 10, these futures were trading at over $96 a barrel.

The next OPEC meeting, where Saudi Arabia is generally considered the strongest partner, will take place in early December. OPEC has 13 member countries.

The strongest member of the non-OPEC group is Russia.

The United States, along with Russia and Saudi Arabia, is one of the three largest oil producers. The United States authorized in 2022 the release of crude from its strategic reserves to avoid peaks with some results. The United States and China are the biggest oil consumers in the world.

On September 19, the DOE said in a statement that US President Joe Biden had authorized the release of an additional 10 million barrels from strategic reserves for November.

The US government and refiners held talks in June over record fuel prices.
Source: Reuters