US Soaring Oil Production Not Guarantor for Reduced Gasoline Prices

April 17th, 2013 | by Morris Beschloss | Comments

While the debate over the sensational domestic U.S. oil production increase keeps getting entangled with the antipathy of the “climatological purists,” the fossil fuel buffs are countering with the anticipation that gasoline prices at the pump will become the prime beneficiaries of such “oil Americanization.”

Although all signs point to 2013 becoming the year of greater U.S. home energy production than imports— first time since 1995—, this will not necessarily bring down the current mid-90′s dollar prices per gallon, even as the nation approaches the possibility that domestic oil supplies will overwhelm U.S. demand within the next decade. What most unsophisticated observes fail to realize is that oil is literally a global solvent, with refiners, who produce all oil derivatives selling its output for the highest prices that the world market will bear. U.S. refiners, who comprise the largest world capacity, have been able to reach record exports, especially into Mexico, where 60% of all its gasoline comes from U.S. refineries located in Greater Houston, as well as Southern Louisiana.

What “energy independence” and then some will accomplish is “liberation” from OPEC and American’s Middle East antagonists, especially, who have used geopolitical crises as a tool to extort the highest prices from the world of oil demand.

Just as important are the thousands of construction workers that will be employed to establish a modern network of a national pipeline system that has been sadly lacking for decades. It is a grievous paradox that America’s most populous state, and the greatest oil shale potential identified, depends on an antiquated pipeline from Alaska, as well as a lack of refineries. It doesn’t help that America’s most aggressive environmental enforcement agency, the California Air Resources Board, has blocked every attempt to expand the Golden State’s greater dependence on expensive imports, as well as the highest gasoline taxes in the country.

What will likely come to a head this year is not only the Trans-Canada XL oil pipeline, but the initial development of an upgraded national pipeline system. But much more important could be the end of a multi-billion dollar annual energy trade deficit. Of even greater magnitude are billions of dollars of new revenues and exports, plus internal business taxes, which could become the single most important contributor to the deflating of America’s long suffering debt and deficits.

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