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The Brown Revolution Needs Help

An earlier post drew attention to falling gasoline consumption as a potential harbinger of bad economic news, but there is a flip side to the issue. As Blake Clayton, a new energy blogger at the Council on Foreign Relations, a former Mead haunt, explains, falling domestic demand combined with a surge in foreign consumption and new oil sources coming on stream are contributing to a remarkable reversal in US net imports of petroleum products.

Let’s not get carried away; the US is exporting refined petroleum products, but is still importing oil.  Even so, this is big news, highlighting important trends in the American energy market and the economy as a whole.

Regular Via Meadia readers know that the US is in the midst of a brown revolution that has the potential to create new jobs and make the global energy market more robust, but Clayton’s story takes us deeper. The efficiency of US refineries combined with our secure and ample supplies of oil makes the US a competitive player in the business.

Export growth is key for a long term American recovery; refining a mix of domestically produced and imported crude oil and selling it on to world markets is a great business for the United States.

The Keystone Pipeline controversy is about more than the immediate jobs at stake.  It’s about whether the United States is smart enough and quick enough to seize an important economic niche. The pipeline, if built, will bring crude oil south for refining and in part for re-export. Getting this right is part of building an exporting platform and capacity that will help underwrite our prosperity for years to come.

Our neighbors to the north have even more oil to produce, and, as we’ve pointed out, America’s refining capacity means the country can earn even more if we can transport it south.

Republicans and Democrats need to get together and make this happen.

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  • Cromwell

    Repubs and Donks getting together and making this happen will not itself happen until we have a president who takes his energy policy counsel from someone other than Robert Redford.

  • Anthony

    As noted on post on Saudi Arabia, energy needs and supply are crucial 21st century issue. Energy and its safe and secure availability as well as different forms will underlay not just economic opportunities but also transnational strategic engagement. Getting it right entails recognition and recasting WRM.

  • Silverfiddle

    We are beginning to resemble a third-world nation: Rich in natural resources but saddled with a bumbling government unwilling or unable to leverage it and bring forth economic prosperity from it.

  • bill phelps

    Is the USA selfsufficient in energy? If so, the national security argument for energy conservation, including but not limited to automobile gasolene milage, is not valid today. Is anyone in the administration or the Congress listening?

  • Mark Michael

    I emailed my senator, Sherrod Brown (D-OH), and asked him to support the Keystone XL Pipeline project. He’s a very liberal D who prefers to support environmentalists, labor unions, and Obama. But his response to my letter (sort of) gave the impression he might support it if it came up in the Senate. Here’s most of what his email response was:

    “Oil from tar sands is an emerging fuel source that would increase oil exports from Canada to the United States. However, there are some environmental challenges that have hampered its more widespread use. Overcoming these challenges will be an important step in increasing the use of oil from tar sands. Some recent reports have also found that the Keystone project could actually lead to an increase in gas prices in the Midwest because the pipeline would divert oil from Midwestern refineries.

    “I am strongly in favor of the continued development of alternative and renewable energy sources. I appreciate hearing your thoughts and will continue to work for a national energy policy that promotes the economic and national security of our nation. Should legislation on oil from tar sands come before the Senate I will certainly keep your comments in mind.”

    He’s up for reelection this November. Hopefully, he’s running scared! There’s an R primary in March and several are contending for the R spot. It’s likely the state Treasurer, Josh Mandel, will win the primary. Polls show Brown slightly ahead of him today. We’ll see. The R’s need 4 seats to get to a 51-49 majority in the Senate (Biden as VP breaks any tie vote, hence the need for 51), but really need 6 or 7 to get a working majority in the Senate, thanks to several RINOs who vote D a lot.

    Ohio has let thousands of leases for natural gas drilling in the eastern part of the state where the Marcella and Utica shale deposits are. The R legislature is friendly to shale natural gas drilling, so unless the EPA blocks it, it should move ahead strongly in the coming years. A $650 million new steel mill is being built to build pipe for the needed pipelines to transport the gas. It’s likely a billion-dollar gas refinery will also be located in Ohio (it’s competing with WVa and PA, I think) to take advantage of the low-cost natural gas.

  • a nissen

    That is an extremely confusing account from a former haunt (whatever that means). Clayton writes as though his readers all know the difference between crude, petroleum products, refined products, etc. etc. The charts are either poorly explained or contradict the text. The only thing clearly consistent with other accounts is the following:

    “U.S. refineries sent away an average of 380 thousand barrels per day (kb/d), on a net basis, last year.”

    I agree with the WRM take-away that refineries have been doing an outstanding job since 2005, although as pointed out in the prior post, conservation, and the Great Recession have been a big help too.

    As to what the future holds, the better bet is to assume the future is not likely to resemble the last “war” (a ponzi scheme never intended to be sustainable) no matter how many players are raring to take up where they left off with taxpayer refreshed capital. Free market, my foot.

  • Jacksonian Libertarian

    I went to the US Energy Information Agency and looked at the gasoline consumption data that you were talking about. I have to say that the data is bogus. It showed South Carolina’s consumption dropping from an average of 800 Jun. – Sep. to 300 in Nov. and Dec. that large of a drop would have been noticed, especially with the recent primary there and with neighboring states showing only minor drops in consumption consistent with winter. The US Energy Information Agency is incompetent, is a much better explanation for the enormous drop in the consumption of gasoline in their report.

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