Posted on 07/17/2013 5:18:09 AM PDT by thackney
The surge in U.S. oil production is making a difference in the energy market, even if American consumers aren’t necessarily seeing the savings at the pump, Adam Sieminski, head of the Energy Information Administration, told lawmakers Tuesday.
U.S. crude oil production jumped by nearly a million barrels per day last year, reaching its highest average daily level since 1995, although gasoline prices so far this year have averaged $3.56 per gallon, a modest 6 cents below last year’s price, according to AAA data.
“Consumers are benefiting from domestic oil production,” Sieminski told the Senate Energy and Natural Resources Committee on Tuesday during a hearing on domestic oil production’s impacts on the price of gas.
The U.S. energy renaissance from shale has increased the amount of oil that is in the global market. And that increase, Sieminski said, is helping to hold international oil prices down and to further insulate consumers from even higher price shock.
It seems counterintutive, said the committee’s chairman, Sen. Ron Wyden (D-Ore.).
“Supply is up, demand is down, but prices at the pump are still stubbornly high and sometimes as volatile as gas itself,” Wyden said. And while refiners are benefiting from lower oil prices, there’s “a lot less joy for millions of consumers at the pump.”
According to AAA, the current national average for a gallon of regular gasoline is $3.64 — a year ago it was $3.40. The highest recorded average price for regular unleaded was $4.11 in June 2008.
The price of oil and domestic supply aren’t the only things that affect gas prices, said Chris Plaushin, director of federal relations for AAA, who pointed to factors such as scheduled and unscheduled refinery outages, bad weather, global unrest and regional or local pipeline disruptions.
“This is the new normal,” he said. “The days of a national pump price below $3 is a thing of the past.” Another factor is the type of oil that America is producing. Much of the crude from shale is lighter and better processed at refineries overseas, said Jeff Hume, vice chairman for strategic growth initiatives for Continental Resources Inc. The Gulf Coast refineries are best suited to handle heavier, more complex crude. The “market, not the federal government, should determine where the crude is processed,” Hume said.
Industry representatives also blamed the pump prices on the renewable fuels standard, which requires refiners to blend biofuels, such as ethanol, into gasoline. If refiners fall short of the volume requirements, they must purchase credits, called RINs, to reach their mandated blending volumes, and they pass those increased costs to distributors, who make up for it from consumers.
“The RFS is out of control,” said Bill Klesse, chairman and CEO of Valero Energy Corp., which owns 13 refineries in the U.S. “The RFS must be fixed. The cost is just skyrocketing. … We support and believe ethanol will be a part of the fuel mix in this country. But the RFS is broken. There is no cellulosic [biofuel] to speak of. Any ethanol has to be imported.”
Klesse said the mandate will cost Valero between $500 million and $750 million this year because of the cost of RINs, which are around $1.33 per gallon of advanced biofuel and biomass-based diesel, and $1.32 for corn-based ethanol.
Weren’t we told it would take 20 years to see any “benefits” from all of this drilling and oil production?
Guess we will have to wait a few more years.
The BIGGEST problem as usual seems to be government meddling in private enterprise.
Don`t tell Obama!
It was ten years not twenty, and that was describing areas like ANWR or a new Offshore location with no existing infrastructure. Ten years in such locations from initial release for exploration to commercial production is still a good estimate.
‘“Consumers are benefiting from domestic oil production,” Sieminski told the Senate Energy and Natural Resources Committee on Tuesday during a hearing on domestic oil production’s impacts on the price of gas.’
Yeah, how?
Oil suppply abundant but finite.
US$ supply abundant and infinite.
Therefore, evermore worthless US$ will be required to acquire essential OIL. Our "new normal".
Thanks, I knew Freepers wouldn't let me down.
Do you think prices would be higher, lower or stay the same if the US was producing 2 million barrels per day less than today?
That was the production rate 4 years ago. In the same time frame, Global petroleum consumption has risen 4.5 million barrels per day.
With a .20 jump in less than a week locally (Zip 26201), youy're right. ;)
“Industry representatives also blamed the pump prices on the renewable fuels standard, which requires refiners to blend biofuels, such as ethanol, into gasoline”
I think I see a problem.
Climbing it is...
Gas prices have jumped 20 cents in less than 10 days here in Memphis, TN area.
If we built refineries at home to process the oil that is under our soil, something tells me we'd find the price of gasoline a bit more palatable.
And I have a difficult time with $3-plus as a 'new normal' when just five years ago under George Bush the average price was $1.89.
Pump prices in my neighborhood up 30 cents in the past month. And all the usual conspiracy theorists are springing into action.
“Industry representatives also blamed the pump prices on the renewable fuels standard, which requires refiners to blend biofuels, such as ethanol, into gasoline. If refiners fall short of the volume requirements, they must purchase credits, called RINs, to reach their mandated blending volumes, and they pass those increased costs to distributors, who make up for it from consumers.”
Klesse said the mandate will cost Valero between $500 million and $750 million this year because of the cost of RINs, which are around $1.33 per gallon of advanced biofuel and biomass-based diesel, and $1.32 for corn-based ethanol.
GOVT ethanol mandates cause the price of gasoline to go up $1.32/gallon. Add the recent federal and state tax increases, and the manipulation of the US dollar and we get the $3.50 gasoline. The recent increase of $.15-.25 is the typical summer driving season gauge.
Last Tuesday, the 9th, gas was 3.19 today it is 3.79
Back in 2008 it was Bushes oil buddies screwing the citizenry, what is the media excuse now?
Ethanol is worse than the price change per gallon. It is less efficient as well. Your price per mile is even worse than the price per gallon it adds.
Ethanol also wrecks your engine. It is a crap fuel. Biodiesel is crap as well, the cloud point is too low. It gels at low temperatures.
Look at refining margins.
We refine more crude oil in the US than we use ourselves. The cases of exporting oil are essential all to the closest Canadian Refinery, where we often get the refined products back. We don't have a shortage of refineries, we have a shortage of domestic oil production, but it is getting better.
The price was that low for about a week as I recall.
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