Are Fuel Exports Driving Up the Price of Gas?

Yes, they probably are. But here's why that's OK.

The U.S. fossil fuel renaissance has sparked job booms in the oil fields of North Dakota and Texas, shrunk our national import tab, and led to a whole lot of talk about energy independence. But, as BloombergBusinessweek noted recently, one thing it hasn't done is lower the price of gasoline for American motorists, who are still paying $3.71 a gallon

Why not? There are a lot of ways to answer that question, the simplest being that despite all our drilling, oil is remains expensive. Worldwide, demand still beats supply. And since the cost of crude accounts for 72 percent of the cost of gasoline,* pump prices have stayed high. 

But that doesn't quite put the issue to bed. After all, Americans are driving and fueling up less, which should theoretically encourage the oil refiners that produce our gasoline and diesel to cut their prices. Businessweek points to a few reasons why that hasn't happened, but I want to focus on just one of them: exports. 

As the magazine's graph below shows, U.S. exports of refined oil products have surged over the past couple of years, at the same time as the price of gas rebounded hard from its recession-time drop.  


Coincidence? Some say not. Refiners, the argument goes, are choosing to make products that they can sell for a premium on the global market rather than more cheaply at home. And there's certainly truth to that. When something scarce is sold to the highest bidder anywhere in the worldwide, prices inevitably go up (See: Oil).

But does that mean it's time to clamp down on exports? Not necessarily. 

First, it's not clear how big an impact they make, partly because we don't export a huge portion of our fuel supply. Of the 3 million or so barrels a day of refined products U.S. refiners ship abroad, only about half are either distillate fuels (which include diesel) or gasoline. American drivers and truckers, meanwhile, use roughly 12 million barrels of fuel each day. Meanwhile, there's no guarantee that if we suddenly clamped down on exports, refiners would choose to dump their extra supply on the domestic market. Instead, they could choose to reduce production, or as the industry argues whenever someone suggests cutting them off form the world market, simply shut down the refineries that stop being profitable. That might sound like fear mongering, but companies have done it in the past

And finally, fuel exports offer certain perks. Namely, they're exports. Fuel and other petroleum products combine to make our largest export category by dollar value, bigger than cars, machinery, or jets. That, in turn, helps out our growth, and creates jobs in places like the Gulf region. 

So in short, yes exports are probably costing drivers a bit more. But it's not clear that ending them would be worth losing their benefits. 


*If you're really interested in the breakdown of what goes into gas prices, the California Energy Commission offers a handy year-to-year cart. 

Jump to comments
Presented by

Jordan Weissmann is a senior associate editor at The Atlantic.

Get Today's Top Stories in Your Inbox (preview)

A Technicolor Time-Lapse of Alaska's Northern Lights

The beauty of aurora borealis, as seen from America's last frontier

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus


A Time-Lapse of Alaska's Northern Lights

The beauty of aurora borealis, as seen from America's last frontier


What Do You Wish You Learned in College?

Ivy League academics reveal their undergrad regrets


Famous Movies, Reimagined

From Apocalypse Now to The Lord of the Rings, this clever video puts a new spin on Hollywood's greatest hits.


What Is a City?

Cities are like nothing else on Earth.


CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.



More in Business

Just In