United States exports of noncrude petroleum products increased for the 13th straight year in 2014, the Energy Information Administration said in a report on March 5, 2015. The U.S. averaged 3.8 MMBOPD in 2014 – an increase of approximately 10% from 2013. The overwhelming majority of the product remained in the western hemisphere, being sent to various ports in both North and South America. Most gasoline exports are merely shipped across the border to customers in Mexico and Canada.
Gasoline exports typically peak near the end of each fiscal year due to seasonality and a decline in U.S. demand. The larger-than-normal gas volumes are sent elsewhere and led to a monthly record of 875 MBOPD in December 2014. Refinery run rates are also at all-time highs, flirting with a 90% utilization rate and receiving roughly 15 MMBOPD (including the 6 MMBOPD of imported crude). The lowered gasoline demand in the U.S. has led to a rise in prices. In the latest report, the average price for a gallon of gas is $2.42 – roughly 15% higher than the price of $2.06 in mid-January.
Source: EIA
Are we entering another Record Setting Year?
The ban on crude exports has become a hotly contested issue, and the chatter has only increased since OPEC’s status quo approach to production cut global spot prices in half. Many executives in the oil and gas industry have publicly called on ending the ban, including Rex Tillerson, Chief Executive Officer of ExxonMobil (ticker: XOM), and Ryan Lance, Chief Executive Officer of ConocoPhillips. A report from the Brookings Institute says lifting the ban will increase America’s global power and foreign relations, while the American Petroleum Institute said scrapping the export ban would diversify the market. A detailed report from the Energy Information Administration is expected to be released in the first half of 2015.
The export of outright crude products is currently banned, but a select group of companies is allowed to send refined products abroad. Currently, the only companies with said permits are Enterprise Products Partners (ticker: EPD), Pioneer Natural Resources (ticker: PXD) and Royal Dutch Shell (ticker: RDS.B). Australia-based BHP Billiton sent products overseas without an official government ruling in November 2014, saying its product met all legal requirements. Meanwhile, ConocoPhillips (ticker: COP) is seeking a license and Kinder Morgan (ticker: KMI), a rival of EPD, is supposedly weighing its options.
Meanwhile, the government is carefully opening the door for oil trade, the Department of Commerce said in December that it had begun to approve the backlog of requests, but a government aide said “there’s not a lot of pressure to do more.” Sources of Reuters said the U.S. port authority was recently encouraging certain companies to exploit loopholes in the export ban, such as “self-classifying” the cargo.
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