More domestic oil key to addressing higher gasoline prices

02 23, 2012 by American Petroleum Institute

In remarks to reporters this morning, API’s Chief Economist John Felmy said the nation must develop more of its own oil and natural gas and allow more oil imports from energy-rich Canada to increase America’s energy security and help address higher gasoline prices:

“By far, the single biggest factor in today’s higher gasoline prices is the rising cost of crude oil. It has driven virtually all the rise in gasoline prices. Together, what refiners have to pay on the world market for crude plus gasoline taxes accounts for over $3.00 – or about 84 percent – of what people are paying at the pump today.

“Exports are not causing gasoline prices to rise. Less than one-sixth of product exports have been gasoline, and only a tiny amount of this was the reformulated gasoline used in larger metropolitan areas.

“U.S. refiners produce fuels primarily for American markets and always have. However, when supplies are available to export – as they are today because of weak U.S. demand – they put downward pressure on the prices of the gasoline and other products we import. Exports also mean jobs for Americans, including good paying U.S. refinery jobs, and a lower trade deficit.

“The administration understands that rising crude oil prices are driving higher gasoline prices. We agree with that. But we don’t agree on solutions. The industry must be allowed to develop at home more of its ample crude oil and natural gas resources. More U.S. barrels on crude markets would help drive down crude costs and reduce gasoline prices. We need policies that ease access to U.S. oil and natural gas resources, which are still very ample. We also need policies that add critical infrastructure, such as building the Keystone XL pipeline, to bring in more of Canada’s vast supplies of oil, and policies that keep regulations and tax policy reasonable. The administration has not stepped up to the plate on any of this.”

API represents more than 490 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.