Dec. 2 (Bloomberg) -- U.S. refining margins are shrinking just as the nation becomes a net exporter of oil products for the first time since 1949.
Companies lost $1.11 a barrel from processing Light Louisiana Sweet crude, the benchmark Gulf Coast grade, as of Nov. 25. That was the worst return since Sept. 21 and compared with an average profit of $5.50 this year, according to data compiled by Bloomberg. U.S. shipments abroad of gasoline, diesel and jet fuel exceeded imports by 64 million barrels in the first nine months of this year, Energy Department data show.
"If refiners want to stay in business, they have to look to overseas markets," said Roy Jordan, a London-based analyst at research company Facts Global Energy, who worked for more than 30 years at Royal Dutch Shell Plc, Europe's largest oil company. Some "have had to close down or reduce runs as they can't compete. There are several refiners operating now who will disappear over the next few years," he said by phone yesterday.
The jump in U.S. exports underlines how refiners in the world's biggest economy are seeking to protect their returns as an unemployment rate stuck close to 9 percent and a struggling housing market restrain consumption at home. Companies from Valero Energy Corp. to Marathon Petroleum Corp. are processing more crude to feed demand in Mexico and Brazil, where economic growth is outpacing the U.S.
Sales of everything from automobiles to washing machines have helped keep the U.S. recovery on track. Exports, which reached a record $180.4 billion in September, climbed 18 percent this year from the same period in 2010. Merchandise shipments surged 21 percent last year, the biggest increase since 1988.
'Flat or Down'
The U.S., the world's largest crude user, shipped 753.4 million barrels of gasoline, diesel and other fuels abroad in the first nine months of this year, the Energy Department said in its Petroleum Supply Monthly on Nov. 29. That compares with 600.6 million barrels in the corresponding period of 2010. The nation hasn't been a net exporter of oil products since 1949, a year in which the U.S. economy shrank 0.5 percent before expanding at an average annual rate of 6.2 percent through 1953.
"The U.S. has been flat or down for overall oil consumption versus the world, which continues to rise mainly due to emerging markets," Jeremy Friesen, a commodity strategist at Societe Generale SA in Hong Kong, said in a telephone interview. "Latin American fuel demand continues to be pretty good."
Refining Loss
Oil consumption in Latin America will rise 3.3 percent to 6.7 million barrels a day a next year, while contracting 1 percent in Europe and by 0.5 percent in North America, the Paris-based International Energy Agency said Nov. 10. Mexico's use of U.S.-made motor fuels was twice as high in September as it was a year earlier, U.S. government data published Nov. 29 showed.
Gasoline "has been going pretty much south of the border to Mexico or other parts of Latin America," Ashley Smith, a vice president at Valero, said on a Nov. 1 conference call to discuss the San Antonio-based company's fourfold increase in third-quarter net income. "The diesel has been going split between Europe and Latin America."
The loss from refining three barrels of Louisiana Light into two barrels of gasoline and one of heating oil, the so- called 3-2-1 crack spread, was 66 cents yesterday, Bloomberg data show. That compares with profit of $4.52 at the start of the year.
Jobless Rate
A barrel of LLS cost $111.05 yesterday, up 14 percent this year and $10.85 higher than West Texas Intermediate oil futures, according to Bloomberg data. Crude for January delivery traded at $100.15 a barrel, down 0.1 percent, in electronic trading today on the Nymex.
U.S. Gulf prompt 87-octane gasoline prices have gained 4.4 percent this year to $2.49 a gallon, while heating oil has increased 18 percent to $3 a gallon, data show.
