U.S. Gas Price Rises—Along With Exports

by Rachel Baker on April 22, 2014

I find the timing of this article interesting. The Obama administration pushed back the decision on the Keystone Pipeline; and the delay is apparently causing serious issues for the management and investors of TransCaada, the project’s developer. And now, gasoline prices are rising in the U.S. because we are exporting too much gas.

Anyone want to bet the argument for the Keystone Pipeline will be that it will help lower gasoline prices across the United States? How much of what comes from the Keystone Pipeline will stay in the U.S. and how much of that will be used to decrease the gasoline prices across the country?

Drivers in the U.S. are facing rising gasoline prices ahead of summer-vacation season, just as refiners here are shipping more gas to other countries.

A new pipeline, built to release a glut of crude oil that was stuck in the middle of the country, is now feeding oil to refineries on the Gulf Coast that churn out gasoline and diesel. While these fuels still make their way to the Southeast and the East Coast, growing amounts are being sold to Mexico, the Netherlands, Brazil and other countries.

The push into these markets has been spurred by the U.S. oil boom. Rising oil output had been flooding the nation’s oil market in recent years, keeping U.S. crude prices low relative to world prices. Confronted with tepid fuel demand in the U.S., refiners have been ramping up exports, creating more global competition for U.S.-produced fuel.

While the construction of pipelines and other transportation infrastructure allows other countries to benefit from the oil boom, it also means the market for motor fuels has become more competitive. The gasoline market now has to reckon with demand from other countries—and the potential impact on prices—during a U.S. economic recovery many economists see as fragile.

Read the whole article here:

Read about the Obama administration pushback here:

Read about the TransCanada headaches here:

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