Rising Gasoline Prices Despite Lower Consumption: Zaun Report 3/8

Anyone tired of high gas prices? Do you wonder when the Obama Administration will fully engage in a discussion on energy policy? Who should we blame for the price spikes? All of these are legitimate questions. 

Retailers are selling a commodity traded on the world market – they don’t control the price of fuel. Retailers purchase the product and then make every effort to satisfy the consumer. Last year the United States exported a record amount of gasoline! How does that make sense? 

For the first time the top export of the United States, the largest consumer of the world’s oil production at 20% produced globally, was fuel. Measured in dollars, the United States shipped more gasoline, diesel, and jet fuel than any other single export. It was also the first year in more than 60 that we have been a net exporter of these fuels. 

America is still the largest importer of crude oil because we are only responsible for 9% of the world’s production. In fact $300 billion of our trade deficit was directly related to imported crude oil. In comparison, fuel exports were $88 billion in 2011. In 2011, U.S. refiners exported 117 million gallons per day of gasoline, diesel, and jet fuel. This is up from 40 million gallons per day a decade earlier. 

One of the reasons fuel exports are on the rise is because the U.S. is using less fuel due to the weak economy and more efficient vehicles. In other words, American consumers are using less fuel and driving more efficient vehicles yet the American consumer is penalized by paying more for fuel, as refiners have been eager to export to growing markets. 

The last time the U.S. was a net exporter of fuels was 1949. Currently, the United States receives its oil from the following sources: 

 Canada 27% 

 Mexico 12% 

 Saudi Arabia 12% 

 Venezuela 10% 

 Nigeria 9% 

 Russia 6% 

 Columbia 4% 

 Others, including OPEC, not listed above 20%  

On the horizon, new technologies and the development of home-grown energy resources may help diversify transportation fuels and stabilize prices. Ethanol and biodiesel are now providing about 5% of the nation’s transportation energy needs, which has had a positive economic impact on corn and soybean prices as well as Iowa’s thriving ethanol industry. 

Advances in drilling techniques are also contributing to the supply of domestically produced natural gas that can be used to fuel vehicles, but higher up-front costs of these vehicles still is an issue that needs to be resolved. However, as the price of gasoline and diesel fuel continues to escalate, the costs of conversion to natural gas vehicles is becoming a possible option. 

The future has a host of challenges and a very strong potential upside, but consumers are facing real challenges and are getting frustrated with the impact of continually higher fuel costs on their already tight family budgets. 

Talk to Your Elected Officials

There are two public forums set in Urbandale with my friend, Rep. Scott Raecker. The forums are sponsored by the great Urbandale Chamber and will take place at 2900 Justin Drive, Suite L. on the following dates: 

Saturday, March 31 - 10:30 am to noon

Saturday, April 28 - 10:30 am to noon 

Please join me when you can. If you cannot attend please email me at brad.zaun@legis.iowa.gov or call 515-281-3371. I am always interested in your opinion and it is truly an honor to serve you!