Also in this brief: Gasoline to average $2.38/gallon ($.79CDN/litre) this summer
API calls for tighter integration of North American oil/gas markets as Canada seeks new markets in Asia
Jack Gerard, CEO of the American Petroleum Institute, says he is pleased to see the Trump Administration’s recommendations for “modernizing” the North American Free Trade Agreement (NAFTA) to preserve and strengthen North American energy markets and its benefits for consumers.
“NAFTA provides a strong foundation for the energy flows that occur between the U.S., Canada and Mexico,” said Gerard in a release Monday.
“We applaud this administration’s willingness to consider ways to improve North American energy markets that are already providing enormous benefits to the US economy and consumers. The US is now the largest producer of oil and natural gas in the world, and this coupled with enhanced energy integration with Canada and Mexico will increase long-term US energy and national security.”
Gerard says NAFTA has played a critical role in North American energy security by facilitating cross-border trade and investment in energy, supporting millions of American jobs in the oil and natural gas industry.
“We encourage the administration and Congress to keep this in mind as they consider possible changes to the agreement,” he said.
API has promoted North American energy integration and the benefits provided to American consumers and businesses.
In June, API submitted comments on NAFTA to US Trade Representative Robert Lighthizer highlighting these benefits to the US economy.
For instance, NAFTA promotes imports and exports to and from the US, Canada and Mexico – all of which support the 9.8 million jobs within the US oil and gas industry and reflect 8 per cent of the U.S. economy.
“NAFTA supports US jobs and manufacturing in energy, helps to make energy more affordable for American families, enhances energy security and affordability for US allies, and enables US companies to compete in Canada and gain opportunities for development in Mexico,” said Gerard.
“Preserving these benefits is critical, and that includes supporting key provisions like a strong Investor State Dispute Settlement mechanism to protect US companies and ensure they receive fair and equitable treatment. As the process gets underway, we look forward to working with the administration and Congress to continue the US energy renaissance.”
Gasoline to average $2.38/gallon ($.79CDN/litre) this summer
In the latest Short-Term Energy Outlook (STEO), EIA forecasts that the U.S. retail price for regular gasoline will average $2.38 per gallon this summer (April through Sept.).
If realized, it would be the second-lowest summer average gasoline price since 2005, according to the U.S. Energy Information Administration.
The forecast price for this summer is slightly higher than the 2016 summer average of $2.23/gal but lower than the forecast presented in the April 2017 Short-Term Energy and Summer Fuels Outlook.
Changes in the gasoline price forecast since April are largely attributable to decreases in crude oil prices.
EIA now forecasts Brent crude oil prices to average $50 per barrel (b) for the summer driving season, down from a projection of $54/b in the April STEO.
Crude oil prices have fallen in recent months as U.S. oil producers have increased drilling activity and production—with many of them hedging at higher oil prices seen in early 2017—and as Libya and Nigeria have produced at levels above expectations.
These developments have served to offset some of the production cuts agreed to by members of the Organization of the Petroleum Exporting Countries (OPEC) and some other leading exporters with the intention of reducing elevated global oil inventories.
The $4/b decrease in the average Brent price relative to EIA’s April forecast translates into about a 10 cents/gal decrease in the gasoline price.
Because a barrel of oil contains 42 gallons, each dollar of change in the price of oil results in about a 2.4 cent-per-gallon change in the price of gasoline.
The 10 cents/gal decrease resulting from the lower Brent price forecast is partially offset by higher wholesale margins for both refiners and distributors, resulting in the 8-cents/gal decrease in the retail gasoline price forecast from the April outlook.
Gasoline wholesale margins, calculated as the difference between the wholesale price of gasoline and the Brent crude oil price, are now forecast to average 47 cents/gal this summer, compared with 42 cents/gal in the April STEO.
Domestic gasoline demand fell by 1.1 per cent through the first four months of 2017, compared with the record level of demand seen in 2016, but still remains 3.1 per cent above the previous five-year average.
However, strong demand in export markets over that period has contributed to record-high levels of U.S. refinery output and enabled higher refinery wholesale margins.
State and local taxes and retail price margins, the other main components of retail gasoline prices, remain relatively unchanged since the April outlook.
On a monthly basis, EIA expects that regular gasoline prices reached their summer peak early in 2017 at an average of $2.42/gal in April.
For the rest of the summer, EIA forecasts gasoline prices to continue declining to an average of $2.33/gal in Sept.