Refined Product Export Ban Will Disrupt Global Markets, Harm American Consumers
Lem Smith
Posted October 4, 2022
Breaking News: API President and CEO Mike Sommers and American Fuel and Petrochemical Manufacturers (AFPM) President and CEO Chet Thompson today sent a letter to U.S. Secretary of Energy Jennifer Granholm raising significant concerns that the administration could pursue a ban or limits on refined petroleum products. Read on for critical excerpts from the letter.
Key Point: “Banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate U.S. allies during a time of war.”
Data Dive: “From the United States’ approximately 18 [million barrels per day (MMBD)] of refining capacity, about 3.5 MMBD of gasoline, diesel, and other refined products are exported. Restricting these exports would cut off important supply from the international market, putting upward pressure on prices, threatening the global flow of essential energy, undermining U.S. allies and creating negative global economic consequences, including here in the United States.”
Debunking Common Myths: “Global commodity prices – including for crude oil, gasoline, and diesel – are set by the global market, not by refiners, in the same way that farmers do not control the price of corn or wheat. Gasoline and diesel fuel prices are primarily driven by the cost of crude oil, which accounted for much of the changes in gasoline and diesel prices through the first seven months of 2022. Refiners’ crude oil acquisition costs represented close to 60 percent of the retail price at the gasoline pump in 2022, according to the EIA.”
Strategic Value: “The U.S. refining sector, bolstered by our technologically advanced facilities and best-in-class workforce, is the most competitive, efficient, and resilient in the world. Participation in the global market is foundational to our position as the world’s refining leader, benefitting American consumers and fuel manufacturers alike.”
Bottom Line: “We urge the Biden administration to speak clearly and with one voice to disavow a refined product export ban or export restrictions, which would only further raise global and U.S. prices, roil energy markets, and deter needed investments across the U.S. energy supply chain. Your understanding and collaboration would be helpful to further a constructive dialogue.”
Please click here to view a full copy of the letter.
About The Author
Lem Smith is API’s vice president for Federal Relations. Lem joined API in February 2020 as vice president for Upstream Policy & Industry Operations. He previously served as a principal at Squire Patton Boggs, an international law and public-policy firm, where he advised private and public sector clients on federal and multi-state policy matters and provided counsel on communications strategies, campaign affairs and crises management. Previously, Lem was director, U.S. Government & Regulatory Affairs at Encana, and responsible for all aspects of U.S. government relations and regulatory policy matters at the state and federal levels. Prior to that, Lem was director of Government Relations for Kerr-McGee Corporation. Lem began his career on Capitol Hill, working for U.S. Senate Majority Leader Trent Lott, U.S. Rep. Roger Wicker (Mississippi) and the late U.S. Rep. Charlie Norwood (Georgia), where he negotiated key member priorities within the 2005 Energy Policy Act (EPAct). Lem is a graduate of the University of Mississippi.