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Out of Gas: Americans Are Being Outbid by Foreigners

Written by Gary North on January 2, 2011

Did you know that the USA exports almost 3 million barrels of refined fuels — gasoline and diesel — every day? Most Americans are unaware of this.

 U.S. refineries exported a record amount of refined fuels in 2011 to markets in South America, Central America and Europe. It was one reason why Americans spent a record amount on gasoline this year: Supplies that might have helped lower prices here had been shipped abroad.

In 2007, U.S. exports of all kinds of fuel held steady throughout the year at 1.24 million to 1.25 million barrels a day, according to Energy Department statistics.

But by 2011, exports of diesel, gasoline and other products had surged. In November and December, U.S. fuel exports averaged between 2.77 million barrels a day and 2.89 million barrels a day, the highest ever.

This should not come as a surprise.

The trend was predicted as early as a year ago, when two analysts with the Energy Department’s Energy Information Administration delivered a presentation to the 2011 Argus Americas Crude Summit in Houston.

Joanne Shore, lead operations research analyst at the Energy Information Administration, and colleague John Hackworth said that U.S. refineries had found thriving and lucrative markets overseas for their products, even as they were shutting down domestic facilities because of low demand.

Let’s not kid ourselves. Americans are in competition with foreigners who are willing and able to bid more for our domestically produced goods. That’s what exporting means. Goods are sold to foreigners and get shipped abroad.

The economy is a giant auction. This rule governs auctions: “high bid wins.” As bidders, we win some and lose some.

We do not like to think of ourselves as losers. But, in the area of refined fuels, there are foreigners who outbid us for almost 3 million barrels a day in 2011. Trade means outbidding others.

All talk of energy independence is silly. We import oil and export gasoline. This is an international auction. Consumers on both sides of every border benefit: national borders, state borders, county borders, and Main Street borders.  Whenever goods cross borders, high-bidding customers win.

 

 

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