President Joe Biden’s decision Tuesday morning to block the purchase of Russian oil is anticipated to drive up gas prices even further.
“Today’s decision has repercussions here at home. Putin’s war is already wreaking havoc on American families’ wallets. Since Putin launched his military buildup along Ukraine’s borders, the price of gasoline at the pump in America has increased by 75 cents. And with this step, the bar will be raised even higher,” Biden stated Tuesday.
Republicans, notably Gov. Greg Abbott, have claimed that increasing oil output in Texas may help lower gasoline costs and accelerate the United States’ transition to energy independence.
Abbott tweeted last week, “Instead of begging for oil from other countries, Biden should cease impeding the US energy sector.” Texas could easily produce enough oil to lower gasoline costs if his Administration would back off.”
However, merely increasing local manufacturing would not assist immediately.
“We do generate a significant amount of oil on a home level. Simply extracting it from the ground does not guarantee that it can be refined,” energy expert Josh Rhodes said Tuesday.
This means that in addition to increasing domestic output, we would need to alter the way refineries work, which cannot be accomplished fast.
However, the increasing output can help keep gas costs low if we export it for processing.
“We can increase production and maybe export more to Europe, which is better equipped to handle that sweet crude.” And hence, that might be beneficial in the near run,” Rhodes explained.
The oil produced in West Texas’s Permian Basin is sweet crude, but most of the oil we buy is sour.
“The primary distinction between sweet and sour crude is the sulfur concentration. Lower quality crude has more contaminants that must be eliminated.
Additionally, sweeter crude has fewer contaminants. Thus, the difference is just in the manner in which information must be handled. And at the moment, we’re only equipped to process lower-quality material, not nearly as much of the wonderful stuff we have here,” Rhodes added.
Given that Russian oil represents less than 4% of the United States’ energy supply, Rhodes believes Biden’s decision Tuesday is mostly symbolic. If the rest of Europe follows suit, we may see much higher pricing.
“If the rest of the world, which uses the remainder of Russian oil, does the same thing, then the price of oil would rise much higher than it is today since we are in a global oil market.”
Biden said Tuesday that the present issue is a warning that the United States must work toward energy independence, while he does not advocate for additional oil output.
“Transforming our economy to run on electric cars driven by renewable energy, while also providing tax incentives to assist American households in winterizing their houses and conserving energy, will help.
And if we succeed, no one will have to worry about the price of gasoline in the future,” Biden stated Tuesday.
More than a simple war
Gas prices have been increasing steadily for some time; they are not entirely linked to Russia’s invasion of Ukraine.
“In 2020, oil prices temporarily fell below zero, showing that demand was far outstripping supply on the market. Prices have risen much beyond $100.
The rebound from COVID limitations has been more rapid since prices have been so low for so long that there has been less investment in the industry,” Rhodes explained.
Additionally, inflation played an impact. “It’s just general inflation. Workforce concerns and various other factors contribute to already-increasing oil costs. And this is only the symbolic spark that ignited the fire,” Rhodes stated.
Concerns about infrastructure
Another issue with our energy infrastructure is how these items are transported.
“Our pipeline ability to transport our products, whether crude oil or processed products, from one area of the nation to the other is fairly restricted,” Rhodes stated.
The Jones Act, enacted in 1918, also obstructs effective product transportation.
“We’re limited in terms of how much we can transport by one of the most basic means, aside from a pipeline, which is via sea, due to the Jones Act, which prohibits a ship from one US port to another unless it is manufactured, or was made, in the United States. “There are just not that many ships built in the United States anymore,” Rhodes noted.