Posted by Don Fullerton on Dec 2, 2011
Filed Under (Environmental Policy, Finance, Other Topics, U.S. Fiscal Policy)
Just a couple days ago, the Wall Street Journal reported that “U.S. exports of gasoline, diesel and other oil-based fuels are soaring, putting the nation on track to be a net exporter of petroleum products in 2011 for the first time in 62 years.” Taken literally, this fact is strictly “correct”, but it is misleading. It is therefore very poor reporting. The authors either don’t understand the words they use, or they are deliberately trying to mislead readers.
The reason it is misleading is because the article implies the U.S. is headed toward “energy independence”, and that implication is wrong. It goes on to say: “As recently as 2005, the U.S. imported nearly 900 million barrels more of petroleum products than it exported. Since then the deficit has been steadily shrinking until finally disappearing last fall, and analysts say the country will not lose its ‘net exporter’ tag anytime soon.” That statement and several expert quotes in the article clearly imply the U.S. is headed toward “energy independence”.
Strictly speaking, the WSJ is correct that the U.S. exports more “petroleum products” than it imports, … but “petroleum products” do not include crude oil!! “Petroleum products” include only refined products like gasoline, diesel fuel, or jet fuel. The implication is only that the U.S. has a large refinery capacity!
The U.S. is a huge net importer of crude oil, and a huge net importer of all “crude oil and petroleum products” taken together, as you can see from the chart below (provided by the U.S. Energy Information Administration). In other words, we import boatloads of crude oil, we refine it, and then we export slightly more refined petroleum products than we import of refined petroleum products. Big deal.
If the WSJ reporters knew what they were talking about, or if they were not trying to mislead readers, then they should have just stated that the U.S. is a huge net importer of all “crude oil and petroleum products” taken together. They didn’t. That is why I conclude they do not understand the point, or that they are trying to misrepresent it. Neither conclusion is good for the Wall Street Journal.
They are simply wrong when they say: “The reversal raises the prospect of the U.S. becoming a major provider of various types of energy to the rest of the world, a status that was once virtually unthinkable.” Just look at the figure!