Forbes Making Misleading Claims

Forbes magazine is making claims that the U.S. is exporting oil to other countries:

America’s Oil Export Problem (Yes, Export)

The U.S. could cut oil imports by nearly 15% tomorrow without using less gasoline, invading a foreign country or driving up prices at the pump. How? By cutting exports.

This will come as a surprise to many, but in the past four years U.S. oil and petroleum exports have reached four consecutive record highs–at least since the early ’80s. In 2007, the U.S. exported 1.43 million barrels of oil per day; up by roughly half a million barrels of oil per day since 2004.

As I said when Jon Tester made similar claims, that’s utter rubbish:

First off, here are the numbers from the EIA on exports from the U.S. of petroleum and petroleum products. What is the #1 destination for these exports? Mexico, one of our largest suppliers of crude oil. #2? Canada, our largest supplier of oil. And what are we sending them? Here, again, is the breakdown. The #1 product that we are supplying? Petroleum coke. #2? Residual fuel oil.

Misleading arguments simply give comfort to those who would argue that energy independence is within our grasp. After all, we are exporting all of this oil to other countries! But such arguments misrepresent the situation we are in.

The argument is correct on one point. Exports of high sulfur diesel did increase when the ultra-low-sulfur-diesel specs went into effect in the U.S. in 2006. However, in 2007 they were back down to the 2005 levels. Further, the total is still only a fraction of the ‘barrels’ of petroleum coke that are factored into the total ‘petroleum’ exports.

But the sound bite message that most people will come away with from articles like this is that we could go a long way toward energy independence if we just stop exporting oil. Just like we could be energy independent if those darn environmentalists would move out of the way and let us drill into our remaining oil reserves. The fact is, the problem of energy independence is so much greater than that. Drilling would be a drop in the bucket (albeit one that I favor). Exports are a drop in the bucket, and the countries that receive the exports – primarily Canada and Mexico – provide us far more petroleum in return.

$100 Oil This Week

It hasn’t gotten all that much media coverage yet, but it is looking more and more like Mexico has taken a Katrina-sized hit that has devastated Tabasco. I had to go to The Irish Times for this:

Government offers aid to Mexico

A week of heavy rains over Mexico caused rivers to overflow, drowning at least 80 per cent of the swampy, oil-rich state of Tabasco. Much of the state capital, Villahermosa, looked like New Orleans after Hurricane Katrina, with murky water reaching to second-storey rooftops and desperate people waiting to be rescued.

There has been some mainstream media coverage, but so far the MSM is largely asleep at the wheel. Another story that emphasizes how this disaster has impacted Mexico’s oil industry:

Mexican President Calderon: Floods Cripple Mexico’s Oil Industry

Villahermosa, Mexico (AHN) – Mexican President Felipe Calderon on Friday warned it would take time to rebuild what has been devastated by the non-stop flooding plaguing the country, including the oil industry, which was crippled by the catastrophe.

“The storms have forced the closure of three of Mexico’s main oil ports, preventing almost all exports and halting a fifth of the country’s oil production. It has a strong economic impact” Calderon said in an interview.

The storm did not spare the Bay of Campeche, Mexico’s main oil producing region and home to more than 100 oil platforms. Overall, the region normally exports about 1.7 million barrels of crude daily. Since, most of the production remains shut down, it would mean that Mexico’s output would drop by 2.6 million barrels a day.

Some 800,000 families were displaced as floods submerged Villahermosa, the capital of Tabasco. More than 300,000 people were also trapped in their homes and rescue operations are still underway.

One hundred percent of the crops were destroyed, on top of the multi million worth of properties and belongings of people that were swept away by floods.
“It’s not just the worst natural catastrophe in the state’s history but, I would venture to say, one of the worst in the country’s recent history,” the President said.

Devastating. Where is the press coverage? 100 percent of crops destroyed? It’s a minor issue in comparison to the human tragedy, but this will probably be the catalyst to push oil on past $100 this week. I estimate the probability of that happening now at 85%.