API says more US oil needed to cut gasoline costs

John Felmy, chief economist with the American Petroleum Institute (API) trade group, said Wednesday that the US must develop more of its own oil and natural gas and allow additional oil imports from Canada.
Those steps would both increase energy security and help address higher gasoline prices, he said.

On a conference call with reporters, Felmy’s remarks were as follows:

“By far, the single biggest factor in today’s higher gasoline prices is the rising cost of crude oil,” Felmy said. “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% - 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.

“US refiners produce fuels primarily for American markets and always have. However, when supplies are available to export - as they are today because of weak US 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 US 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 US barrels on crude markets would help drive down crude costs and reduce gasoline prices. We need policies that ease access to US 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.”

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