American Petroleum Institute Informs Congress on Current Petroleum Situation
A letter to the members of Congress gave the American Petroleum Institute (API) view of the current energy situation at the start of the summer season.
The first point API made was that there is an adequate supply of gasoline as the U.S. heads into the summer driving season. They noted that refiners have produced a record amount of gasoline over the past five months, and gasoline inventories stand 5 percent higher than they were last year at this time.
The API also noted that during the past six weeks, retail gasoline prices have stabilized and even declined in some areas. According to the Department of Energy (DOE), prices in all major regions of the country are down substantially from a year ago, averaging 29 cents per gallon lower for the country as a whole. The steep rise in gasoline prices during March and April reflected higher crude oil prices, which are a major factor influencing the price of gasoline. World crude oil prices have risen sharply since the beginning of the year, as major producing countries have restricted production and world economic activity has increased demand. Recent crude prices have averaged more than 50 percent higher than they were in mid-January.
The letter continued to state that although current supplies are adequate, potential disruptions could still affect gasoline supplies for consumers. API notes that the current patchwork of gasoline specifications across the country limit refiners’ flexibility to shift supplies to where they are most needed, and limited spare refining capacity reduces the ability of the market to respond quickly to unexpected outages or demand surges.
API’s letter concluded with some good news — domestic crude oil production has increased by almost 2 percent this year. The reason is that the industry is using new technologies to find and recover more domestic oil and gas reserves. The natural declines in existing oil fields have been offset by new production from the deepwater offshore fields and in Alaska, where new technologies have allowed development of hitherto unavailable or uneconomic resources. Offshore waters and Alaska together now account for nearly half of U.S. oil production.