National Journal‘s Jim Tankersley has a great article out this morning on an under covered aspect of the energy sector: our inadequate oil transportation infrastructure. Tankersley writes:
The U.S. economy missed out on creating up to a quarter-million jobs this year because it lacked the infrastructure to capitalize on a rare divergence in global oil prices, a National Journal analysis shows.
Simply put, American consumers paid a historically high premium for their gasoline. The economy suffered for it.
…
Here’s the math: From 2001 through the end of 2010, Americans paid, on average, about 90 cents more for a gallon of gasoline than they would have paid for a gallon of West Texas Intermediate crude, which is the benchmark for U.S. oil prices. That’s the historical markup, if you will: 90 extra cents for refining, taxes, and transportation of oil.
But this year, Americans have paid about $1.30 more for a gallon of gas than for a gallon of West Texas crude. That’s 40 cents above average per gallon and nearly $20 above average per barrel. It’s also a decent hit to the domestic economy.
Economists at IHS Global Insight project that for every extra $10 per barrel that Americans spend on gasoline, annual gross domestic product growth slows by 0.2 percent. Employment falls by 120,000 jobs. So a $20 per barrel increase over what Americans historically have paid for gasoline, compared to crude oil, would cost the economy 0.4 percent growth and 240,000 jobs.
Simply put, American consumers paid a historically high premium for their gasoline. The economy suffered for it.
…
Here’s the math: From 2001 through the end of 2010, Americans paid, on average, about 90 cents more for a gallon of gasoline than they would have paid for a gallon of West Texas Intermediate crude, which is the benchmark for U.S. oil prices. That’s the historical markup, if you will: 90 extra cents for refining, taxes, and transportation of oil.
But this year, Americans have paid about $1.30 more for a gallon of gas than for a gallon of West Texas crude. That’s 40 cents above average per gallon and nearly $20 above average per barrel. It’s also a decent hit to the domestic economy.
Economists at IHS Global Insight project that for every extra $10 per barrel that Americans spend on gasoline, annual gross domestic product growth slows by 0.2 percent. Employment falls by 120,000 jobs. So a $20 per barrel increase over what Americans historically have paid for gasoline, compared to crude oil, would cost the economy 0.4 percent growth and 240,000 jobs.
Read the whole thing, but this paragraph should be a big issue for President Obama in 2012:
There’s no evidence that the oil industry manipulated the price spread to boost refining profits; the companies just appear to be benefiting from the nation’s inability to move cheaper oil around freely. Energy industry groups say expanding America’s pipeline infrastructure – including potential Obama administration approval of the Keystone XL pipeline to carry oil south from Canada – would minimize the odds of another wide price split in the future.
Unfortunately Tankersley failed to report that Obama’s decision to delay the Keystone XL pipeline effectively killed the project. Since then, Canadian Prime Minister Stephen Harper has announced his country would sell that oil to China instead.
