Jordan Weissmann at the Atlantic has a fascinating piece on just how it is that the gas-guzzling US has just become a net fuel exporter, even though our oil production peaked in the 1960s.
As you have probably read, the US has just become a net fuel exporter – with refined products, such as diesel, gasoline, and jet fuel made from crude oil now our #1 export.
Of course we still import 9 million barrels of crude a day from the oil producing countries, but our domestic gas use is down at a seven year low. More efficient vehicles, lack of jobs to commute to, baby boomers retiring, and new drivers being more carbon-conscious accounts for the reduction.
But Weissmann digs a little deeper.
Within that bigger picture, though, there’s a smaller and instructive story. It’s about how those meddling government regulators at the Environmental Protection Agency may have helped make U.S. refiners more competitive in the global marketplace. How? By forcing them to create cleaner burning diesel fuel.
THREE CHEERS FOR ESOTERIC DIESEL REGULATION!
If you look at the Energy Information Administration’s breakdown of the country’s petroleum of product exports, one category should jump out at you: distillate fuel oil. That’s the technical term for what we all know as diesel. In October of 2011, U.S. refiners shipped out about 2.7 million barrels a day of finished petroleum products. Forty percent of those barrels contained diesel fuel. Gasoline only accounted for 19 percent.
After signing the Kyoto Protocol and instituting climate regulations requiring low-carbon fuels, ultra low sulfur diesel has become the fuel of choice in the EU. This is a cleaner form of diesel than the US has long used; with lower greenhouse gases.
And oil refineries in the Gulf of Mexico have invested heavily in the sophisticated technology necessary to create that kind of clean diesel fuel.
So the Invisible Hand of the Market led the Gulf refiners to retool in order to export this ultra low-sulfur diesel to meet the demand, right?
Um, no. It was those “jackbooted thugs at the EPA” with that “job-killing agenda” of government regulations.
Not until the EPA rule reducing sulfur in diesel oil by 97% went into effect in 2006, were refineries actually forced to begin producing more of the cleaner diesel. Refiners spent billions updating their plants with the necessary equipment, adding roughly 37% more desulfurization capacity. The result?
Now we make what the climate legislation in the EU requires. So our exports are up. Two-thirds of the diesel exports accounting for the increases were the variety known as “ultra low sulfur.”
So it was the EPA that forced US refiners to produce a commodity that the rest of the more carbon-constrained world market actually wants and needs.
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