US fuel exports rise sharply this year Has helped propel gasoline prices for a record $5 a gallon And that’s putting pressure on US prices of natural gas, which earlier this month hit a more than a decade high.
In recent months, companies and commodity traders have shipped more American gasoline and diesel to Latin America and other overseas markets, charging higher prices than the fuel domestically. They have also shipped more liquefied natural gas, or LNG, In Europe after Russia’s invasion of Ukraine,
While fuel exports have not hit records, they are trending higher than in previous years. Sea shipments of gasoline, diesel and jet fuel departing the US Gulf Coast in March, April and May were up 32% compared to the same three months last year and 11 percent compared to the same period in 2019, according to a market-intelligence firm. % is more. Kepler.
During this, export of natural gas– According to the latest available data from the Energy Information Administration, LNG by tanker and by pipeline to Mexico and Canada – vaulted for a record in March, about 22% of US gas production. Earlier this month domestic prices reached $9.32 per million British thermal units, the highest level since 2008, driven by Europe’s discovery of supplies,
US exports have had little effect on domestic prices in recent years, as the country has enjoyed plentiful supply. fracking boom, But the increase in shipments comes as inventories of crude oil and petroleum products have fallen to their lowest level since 2008. At the time, exports of the refined fuel were small, and American companies had not yet built major LNG export facilities.
Analysts said these unusual conditions are for the first time significantly affecting the exports that Americans pay for gasoline and natural gas, making it expensive to provide heat and electricity to homes.
Natural gas is an important fuel in electricity generation, and rising prices have driven up utility bills. A gas facility in Cameron, LA.
said Western countries are turning to US supplies as Chinese and Russian exports of refined products declined, a situation that would not have been possible before the fracking boom, would have made the US one of the world’s top producers.
“There has been a rapid increase in demand from the US,” Mr Daly said. “We are in a position to export a lot today.”
The link between LNG exports and domestic prices – sometimes disputed by energy-industry advocates – was highlighted this week by news that some natural gas planned for export will be trapped in the US and sold domestically instead. .
US benchmark natural-gas prices fell nearly 17% on Tuesday to about $7.19 per million British thermal unit after Freeport LNG said it has an export facility in Texas. Didn’t expect to be completely online Due for repairs after the June 8 eruption, by the end of 2022.
Plc, noting that US refiners reduced capacity by more than 800,000 barrels a day earlier in the pandemic, and asked them to find ways to increase it now to curb rising prices. The letter did not mention fuel exports.
Some Democratic lawmakers, including Sen. Elizabeth Warren (D., Mass.), have called on Biden to reduce exports to help drive prices down, while House Republicans this month called for increasing US oil and gas production and exports. proposed to help transform Russian energy. ,
The American Petroleum Institute wants Mr. Biden to streamline approvals of energy infrastructure projects and increase access to capital and energy lease sales as a solution to supply-demand problems, a strategy the administration has refused to pursue. Is.
U.S. fuel exports are impacting domestic prices as refiners and traders seek higher prices for their products overseas but lack the ability to keep U.S. inventories at normal levels. However, on current gasoline and diesel prices, he said refiners’ arbitrage opportunities could soon close, allowing the US to buy more fuel from abroad, including Europe.
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“We always import a few barrels, but we can accelerate here in the coming weeks,” said Mr. Yoger.
Fuel and crude are trading cheaper for winter delivery than today, adding to current low storage levels and higher prices.
In general, Katie Childs, Tuxis-Ohrs Fuel Inc. VP, a heating-oil supplier based in Meriden, Conn., will fill her company’s storage tanks during the spring and summer months. Instead, it is buying futures to lock in lower prices. Last Friday, she could have saved about 40 cents a gallon by buying fuel oil for delivery in December.
“There is no incentive to put fuel in storage, which drives up prices because there is less cargo in everything,” said Mrs Childs. “It’s the perfect storm with energy prices.”
Some US businesses are paying customers high energy bills as fuel surchargeFitzgerald Trucking Inc., a Minco, Okla.-based company, has 28 pneumatic tankers, mostly used to haul dry cement powder and fly ash for customers building highways and homes. The company’s president, Joy Fitzgerald, said that so far, it has been able to withstand rising diesel prices due to strong demand for building materials.
“You’ll have to levy fuel surcharges and escalators for a worst-case scenario,” said Mr. Fitzgerald, who is now bidding on projects that will be delivered in six months to a year, when their costs could be higher because of inflation. .
Rising oil prices have helped raise the national average price for a gallon of gasoline to $5 for the first time, and this is adding to inflationary pressures in the US economy. Photo Illustration: Todd Johnson
To Mark Behrman, chief executive of US ammonia and fertilizer supplier
Falling natural gas prices after news about Freeport LNG terminal means it pays domestic prices fertilizer feedstock Less competition from Europe may eventually ease.
“This is the first time that LNG exports from the United States have had such an impact on US demand and prices for users here,” Mr Behrman said, adding that domestic prices have increased to maintain supply in the US. .
Mr Behrman said he would not advocate that the US stop LNG exports, as some manufacturers have done in previous years. But he said he believes domestic prices could soon return to $3 or $4 per million British thermal unit, where prices have been hovering for more than a decade, if US natural-gas Producers decide to pump more.
Natural gas is an important fuel in electricity generation, and rising prices have raised utility bills for businesses and homes, which often pay for natural gas service to heat water and stoves. John Bartlett, President and Co-Portfolio Manager of Reeves Asset Management
Higher US fuel exports are contributing to $5-a-gallon of gas
US fuel exports rise sharply this year Has helped propel gasoline prices for a record $5 a gallon And that’s putting pressure on US prices of natural gas, which earlier this month hit a more than a decade high.
In recent months, companies and commodity traders have shipped more American gasoline and diesel to Latin America and other overseas markets, charging higher prices than the fuel domestically. They have also shipped more liquefied natural gas, or LNG, In Europe after Russia’s invasion of Ukraine,
Fuel shipments surge overseas Further eliminating US inventory who were already ending at low levels Production cuts in the worst phase of the pandemic, Now, US oil and gas producers and refiners are struggling to meet resurgent demand.
While fuel exports have not hit records, they are trending higher than in previous years. Sea shipments of gasoline, diesel and jet fuel departing the US Gulf Coast in March, April and May were up 32% compared to the same three months last year and 11 percent compared to the same period in 2019, according to a market-intelligence firm. % is more. Kepler.
During this, export of natural gas– According to the latest available data from the Energy Information Administration, LNG by tanker and by pipeline to Mexico and Canada – vaulted for a record in March, about 22% of US gas production. Earlier this month domestic prices reached $9.32 per million British thermal units, the highest level since 2008, driven by Europe’s discovery of supplies,
US exports have had little effect on domestic prices in recent years, as the country has enjoyed plentiful supply. fracking boom, But the increase in shipments comes as inventories of crude oil and petroleum products have fallen to their lowest level since 2008. At the time, exports of the refined fuel were small, and American companies had not yet built major LNG export facilities.
Analysts said these unusual conditions are for the first time significantly affecting the exports that Americans pay for gasoline and natural gas, making it expensive to provide heat and electricity to homes.
Natural gas is an important fuel in electricity generation, and rising prices have driven up utility bills. A gas facility in Cameron, LA.
photo:
Mark Felix/Bloomberg News
Richard Daly, Chief Operating Officer
Pioneer Natural Resources Co.
pxd -2.40%
said Western countries are turning to US supplies as Chinese and Russian exports of refined products declined, a situation that would not have been possible before the fracking boom, would have made the US one of the world’s top producers.
“There has been a rapid increase in demand from the US,” Mr Daly said. “We are in a position to export a lot today.”
The link between LNG exports and domestic prices – sometimes disputed by energy-industry advocates – was highlighted this week by news that some natural gas planned for export will be trapped in the US and sold domestically instead. .
US benchmark natural-gas prices fell nearly 17% on Tuesday to about $7.19 per million British thermal unit after Freeport LNG said it has an export facility in Texas. Didn’t expect to be completely online Due for repairs after the June 8 eruption, by the end of 2022.
President Biden on Wednesday Letters issued to seven major US fuel manufacturers Including
Exxon Mobil Corporation
,
beam Corporation
cvx -1.96%
,
Valero Energy Corporation
VLO -4.07%
And
oyster
shell 0.04%
Plc, noting that US refiners reduced capacity by more than 800,000 barrels a day earlier in the pandemic, and asked them to find ways to increase it now to curb rising prices. The letter did not mention fuel exports.
Some Democratic lawmakers, including Sen. Elizabeth Warren (D., Mass.), have called on Biden to reduce exports to help drive prices down, while House Republicans this month called for increasing US oil and gas production and exports. proposed to help transform Russian energy. ,
The American Petroleum Institute wants Mr. Biden to streamline approvals of energy infrastructure projects and increase access to capital and energy lease sales as a solution to supply-demand problems, a strategy the administration has refused to pursue. Is.
Robert Yeager, an analyst
mizuho,
U.S. fuel exports are impacting domestic prices as refiners and traders seek higher prices for their products overseas but lack the ability to keep U.S. inventories at normal levels. However, on current gasoline and diesel prices, he said refiners’ arbitrage opportunities could soon close, allowing the US to buy more fuel from abroad, including Europe.
Newsletter Sign-Up
energy alert
Select breaking and enterprise stories about energy markets and businesses via news alerts delivered to you via email.
“We always import a few barrels, but we can accelerate here in the coming weeks,” said Mr. Yoger.
Fuel and crude are trading cheaper for winter delivery than today, adding to current low storage levels and higher prices.
In general, Katie Childs, Tuxis-Ohrs Fuel Inc. VP, a heating-oil supplier based in Meriden, Conn., will fill her company’s storage tanks during the spring and summer months. Instead, it is buying futures to lock in lower prices. Last Friday, she could have saved about 40 cents a gallon by buying fuel oil for delivery in December.
“There is no incentive to put fuel in storage, which drives up prices because there is less cargo in everything,” said Mrs Childs. “It’s the perfect storm with energy prices.”
Some US businesses are paying customers high energy bills as fuel surchargeFitzgerald Trucking Inc., a Minco, Okla.-based company, has 28 pneumatic tankers, mostly used to haul dry cement powder and fly ash for customers building highways and homes. The company’s president, Joy Fitzgerald, said that so far, it has been able to withstand rising diesel prices due to strong demand for building materials.
“You’ll have to levy fuel surcharges and escalators for a worst-case scenario,” said Mr. Fitzgerald, who is now bidding on projects that will be delivered in six months to a year, when their costs could be higher because of inflation. .
Rising oil prices have helped raise the national average price for a gallon of gasoline to $5 for the first time, and this is adding to inflationary pressures in the US economy. Photo Illustration: Todd Johnson
To Mark Behrman, chief executive of US ammonia and fertilizer supplier
LSB Industries Inc.,
lxu -3.75%
Falling natural gas prices after news about Freeport LNG terminal means it pays domestic prices fertilizer feedstock Less competition from Europe may eventually ease.
“This is the first time that LNG exports from the United States have had such an impact on US demand and prices for users here,” Mr Behrman said, adding that domestic prices have increased to maintain supply in the US. .
Mr Behrman said he would not advocate that the US stop LNG exports, as some manufacturers have done in previous years. But he said he believes domestic prices could soon return to $3 or $4 per million British thermal unit, where prices have been hovering for more than a decade, if US natural-gas Producers decide to pump more.
Natural gas is an important fuel in electricity generation, and rising prices have raised utility bills for businesses and homes, which often pay for natural gas service to heat water and stoves. John Bartlett, President and Co-Portfolio Manager of Reeves Asset Management
Reeves Utility Income Fund,
UTG 2.28%
Hopefully some consumers will reduce their usage.
“In the very short term, people can make very difficult choices,” he said.
write to Colin Eaton Collin.eton@wsj.com and jennifer hiller jennifer.hiller@wsj.com
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