Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: thackney

I did some research and found the following explanation...

US crude production is at its highest in eight years, helping reduce imports. But the US petroleum market is at once global and regional, underscoring how simplistic ideas of energy independence can be in internationally traded commodity markets. The Gulf of Mexico coast, home to 43 per cent of refining capacity and able to consume cheaper crudes, has turned the US into a net exporter of petroleum products for the first time since at least 1949. The inland US, enjoying a surfeit of fresh crude supplies, has been selling discounted petrol into landlocked markets. The west coast is isolated from the rest of the country, while the east coast has historically relied on imported fuel. “The US is really four markets when it comes to products,” says Ed Morse, head of commodities research at Citigroup and a former US oil official.

As big eastern US cities search for replacement fuel sources, Gujarat in India may even hold the advantage over the Gulf of Mexico. The reasons are part infrastructural, part legal.
The Colonial Pipeline, the main petroleum products line running from Houston to the north-east, is nearly full. A planned expansion will add less capacity than that of the Philadelphia refinery destined to close. This leaves tankers, which the Jones Act of 1920 requires to fly the US flag and employ American crews if they are ferrying products between US ports. A debate is raging over whether there are enough, or at least cheap enough, vessels to ship fuel eastwards.
The EIA says a limited number of Jones Act tankers are free to carry refined products from the Gulf to the east coast, while Jones Act barges can cost three times more than hiring a tanker from Europe. Morten Arntzen, chief executive of OSG, a tanker company, counters: “Transportation is a really minuscule part of the delivery cost of gasoline.”


13 posted on 05/09/2012 6:29:55 AM PDT by Recon Dad (Gas & Petroleum Junkie)
[ Post Reply | Private Reply | To 12 | View Replies ]


To: Recon Dad
The inland US, enjoying a surfeit of fresh crude supplies, has been selling discounted petrol into landlocked markets.

Please understand that is a very recent development. In 2008, that oil was a premium price over imports due to demand greater than supply (at market prices).

This leaves tankers, which the Jones Act of 1920 requires to fly the US flag and employ American crews if they are ferrying products between US ports.

I disagree with this claim as there is not a US port with a surplus of domestic crude oil. All that have facilities for handling crude are importing crude, they do not have a surplus to ship to another port.

14 posted on 05/09/2012 7:13:08 AM PDT by thackney (life is fragile, handle with prayer)
[ Post Reply | Private Reply | To 13 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson