Saturday, December 31, 2011


The Price of Fuel

I came across an interesting little article in a back page of the BUSINESS section of the Los Angeles Times for December 31.  The headline reads: U.S. exported record amount of fuel.  The writer goes on to argue that the reason Americans have been paying such high prices for gasoline this year is that the U.S. has been exporting record amounts of refined fuel.  In 2007 the U.S. exported 1.24 to 1.25 million barrels a day.  In 2011 the daily quantity had risen to a daily average between 2.77 and 2.89 million barrels a day.  That's more than twice the rate in 2007.  The writer couples the export of refined fuel to the high prices Americans paid for gasoline in 2011.

Compare this article with the enthusiasm Republican politicians show for the pipeline from Alberta Province in Canada to American refineries close to the Gulf of Mexico.  The argument is made that the pipeline will reduce our need for imported petroleum and bring gasoline prices down.  I humbly state that such an argument is both wrong and deceptive.  Because we, the U.S., export refined gasoline and other fuels, the price of such fuels is determined by the world market, not our internal production of unrefined petroleum.

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