U.S. Now Net Fuel Exporter: Good News or Recessionary Rumblings?

Much has been made of last week's data released by the U.S. Energy Information Administration (EIA) indicating that the US is, once again, a net exporter of fuel - for the first time since 1949.

When the Wall Street Journal first reported the story, it seemed like very good news, and the initial reactions all pointed toward the potential for the US to become energy independent. EIA data showed the country as having net exports of 64 million barrels of various petroleum products through the first nine months of the year, according to the WSJ.

The article maintains this is because emerging markets are demanding increased quantities of fuel, as their economies grow at rates much higher than that of the US. It even quoted energy analysts as saying this net-export trend will stick.

"It looks like a trend that could stay in place for the rest of the decade," Dave Ernsberger, global director of oil at Platts, told the paper. "The conventional wisdom is that U.S. is this giant black hole sucking in energy from around the world. This changes that dynamic."

Whoa whoa whoa, hold on a second there. Before we get too far ahead of ourselves and deem this the official beginning of the end of the US energy quandary, shouldn't we perhaps consider that the trend is what it is? In other words, quite simply a product of our domestic economic recession coupled with emerging market growth - as opposed to Americans wanting to consume less fuel? Will this 2011 trend really "change the dynamic" for good?

Case in point: another quote by another analyst, much further into the article. "Now, 'we're not using as much,' said James Beck, an analyst at the EIA. 'Prior to 2008, basically anything we produced, we used.'"

Well, sure: prior to 2008, the US middle class wasn't crippled by historically low unemployment rates and a severely depressed housing market, among other things. Who's to say that, if things begin looking up in 2013, the US doesn't begin consuming petroleum goods like crazy again? Just as the winter holiday season - namely, Christmas - doesn't stop millions from buying useless junk made for cents on the dollar in Asia or South America, a healthy uptake in employment, for example, may get Americans guzzling gas tout de suite.

Not to mention that petroleum refiners are facing much smaller margins. Also, regulations threaten to hamper the refiners' efforts, which could harm the manufacturing sector's comeback even further. If the likes of China, India, Brazil and others stop growing, they stop buying - and if that happens while the US rebounds, we're back to square one.

Don't get me wrong: it's in everyone's best interests, not least all US manufacturers, for the economy to grow much faster than it has been. But with shale gas infrastructure still nowhere near that of petroleum (with petrol refining arguably the main reason we're exporting so efficiently), it will take years for gas to become mainstream enough to viably share the energy market with crude oil-based fuels.

Until that happens, and until the US administration adopts a solid domestic energy policy with requisite investments, higher imports of foreign oil could be right around the corner.

By. Taras Berezowsky

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