For years, politicians have said that America’s booming oil industry would make the country “energy independent”.
Indeed, the United States is the largest oil producer in the world. That puts it two places ahead of Russia, which shocked the world – and the oil market – by invading Ukraine. Saudi Arabia is the second largest producer
Move sent Gasoline prices skyrocketed to an all-time high.
But the United States does not import much gasoline from Russia.
However, a shock to oil supply and demand in any part of the world could cause a spike somewhere else. Energy independence just means that the United States exports more than it imports – not that it is independent of the rest of the world.
“Oil is a global commodity,” said Patrick De Haan, head of petroleum analysis at gas price tracker GasBuddy. “We can’t overtake the US or take us out of that global system. Just as we’re seeing a shortage of computer chips – we can’t remove ourselves from that situation either. Even if we manufacture some of the computer chips we supply here, that doesn’t ‘fix what’s going on outside our borders with dramatic effects on supply and demand.”
The United States has a Strategic Petroleum Reserve. About 700 million barrels are stored in underground salt caves along the Gulf Coast. That number accounts for about a month’s supply for the whole country. chairperson Joe Biden allowed the release of oil from that reserve twice, but it didn’t make much of a difference in the long run.
Russia is one of the world’s largest oil exporters, but only about 8% of US oil imports come from Russia. Russian oil accounts for about 3.36% of the 20 million barrels the US uses every day. By comparison, 50% of imports come from Canada, according to the US Energy Information Administration.
However, that 8% is still important in its own right. Many American refineries were designed before the domestic oil boom turned the United States into the world’s largest producer.
The oils the United States primarily produces today tend to be lighter, sweeter — meaning they tend to flow at a faster rate and contain lower sulfur content than many other oils.
The problem was that many US refineries were built decades ago, and were therefore built for the heavier, more sulfur-rich crudes common at the time. So many U.S. refineries are actually most efficient using heavy sour crudes imported from elsewhere.
And when oil prices spike, the US cannot simply pump more crude to bring prices down again. The only way to significantly boost production is to drill. That requires investment, and oil companies are both afraid to spend capital and short of staff after years of boom and bust cycles, resulting in a drop in demand in the near future. coronavirus pandemic.
“We have to find a way to retool, retool, bring those people back into the industry,” said Ramanan Krishnamoorti, professor of petroleum engineering at the University of Houston. “Secondly, we need to find a better way to attract capital into the industry, and that will come with more regulatory certainty.”
While waiting, the driver feels pain at the pump, Unless, of course, they drive electric cars.
Watch the video to learn more.
