Gasoline statistics at the national level can mask substantial geographic market variations for this product. Historically, the U.S. market has relied extensively on gasoline imports for supply. This has been especially true on the East Coast which has been the destination of about 85 percent of total U.S. gasoline imports. U.S. suppliers on the East Coast see imports as an economic way to meet domestic market needs. East Coast markets can be supplied by imports from areas such as Europe, where a relative over-supply of gasoline means wholesale prices there tend to be low. This creates a fairly consistent incentive to pull gasoline from Europe to New York Harbor.
So why do Gulf Coast refineries export product rather than send more to the East Coast, especially the Northeast, which receives much gasoline import volumes? Both pipeline capacity and domestic waterborne shipping constraints currently discourage increased volumes from traveling from the Gulf Coast to the East Coast. As long as European and other gasoline supplies remain competitive, the East Coast will continue to draw on these supplies. Additionally, expanded Midwest refining capacity is backing out requirements to ship products from the Gulf Coast north to that area.
At the same time, demand for gasoline in Latin America has been growing. Mexico has always been a major market for U.S. gasoline exports, but the volumes sent south have grown in recent years. Consumption in Mexico has increased 5 percent (38,000 bbl/d) since 2007 and 25 percent (160,000 bbl/d) since 2004. Furthermore in 2010 and 2011, gasoline production from Mexican refineries declined. From 2000-2007, total U.S. gasoline exports averaged about 150,000 bbl/d, and of that, Mexico made up about 110,000 bbl/d. Since 2007, exports have grown by 380,000 bbl/d, with 220,000 bbl/d of this growth going to Mexico, and an additional 130,000 bbl/d going to other countries in Central and South America, notably Brazil, Ecuador, Guatemala, and Panama (Figure 1).
Growth in U.S. gasoline exports does not itself translate into higher prices for U.S. consumers. Rather, export markets are providing an outlet for refiners who would otherwise have faced margins that incentivized run cuts, or possibly even shutdowns, as decreased domestic demand had created excess refining capacity.
The continuation of this export trend is by no means assured over the long term. Given most of the U.S. export growth has been to Latin America, if demand in that region slows, or if refining capacity in those countries is built to meet demand growth, fewer petroleum products could flow south in the future. Continued gasoline exports also depend on what happens domestically. If constraints to moving more gasoline from the Gulf Coast to the Northeast are relieved, the most economically efficient destination for Gulf Coast gasoline could be the Northeast, rather than abroad.