A new pipeline, built to release a glut of crude oil that was stuck in the middle of the country, is now feeding oil to refineries on the Gulf Coast that churn out gasoline and diesel. While these fuels still make their way to the Southeast and the East Coast, growing amounts are being sold to Mexico, the Netherlands, Brazil and other countries.
The push into these markets has been spurred by the U.S. oil boom. Rising oil output had been flooding the nation's oil market in recent years, keeping U.S. crude prices low relative to world prices. Facing tepid fuel demand in the U.S., refiners have been ramping up exports, creating more global competition for U.S.-produced fuel.
While the construction of pipelines and other transportation infrastructure allows other countries to benefit from the oil boom, it also means the market for motor fuels has become more competitive. The gasoline market now has to reckon with demand from other countries—and the potential impact on prices—during a U.S. economic recovery many economists see as fragile.
"Quite frankly, this is not just a U.S.-centric topic anymore," said Nancy White, a spokeswoman for motor club AAA. "Production is going overseas, so that impacts the supply here, and that will drive prices up."
Gasoline stockpiles nationwide are at their lowest point for this time of year since 2011, according to the U.S. Energy Information Administration. Meantime, the retail price for a gallon of regular gasoline averaged $3.68 on Monday, up 4.2% from a year ago, according to the EIA. That is the highest price since March 2013. AAA had the average price on Monday at $3.67.
Gasoline futures climbed 1.1% to $3.0869 a gallon Monday on the New York Mercantile Exchange and are up 11% for the year. Prices for the futures, which are contracts to buy or sell at a specified price and time, are a leading indicator for prices at the pump and don't reflect the impact of taxes and other components of retail prices.
Total petroleum exports, mostly gasoline and diesel, averaged about 3.6 million barrels a day last week, according to the EIA, up 25% from the same period last year. The figure includes a small amount of oil exports that are allowed by the U.S. government, which effectively banned them in 1975.
"Export demand is still growing," said Jan Stuart, head of energy research at Credit Suisse. And as the U.S. economy improves, "slowly but surely, vehicle miles traveled has begun to rise again," he said. Mr. Stuart expects gasoline-futures prices to be 10 cents higher, on average, in the third quarter compared with the second quarter.
The potentially bad news for consumers is good news for oil bulls, who have been struggling against the rising tide of U.S. oil output since the start of 2011. Citing low levels of gasoline supplies, some fund managers say pump prices are unlikely to weaken until after the summer vacation season.
As a group, hedge funds and other money managers held $9.3 billion of bullish bets on Nymex gasoline prices, the most in a year, according to the U.S. Commodity Futures Trading Commission.
