High oil prices and energy concerns are raising the global economy, and the high cost of motor fuel has caused a major economic shock in the United States, according to Yahoo Finance.
Auto-fuel prices were beginning to decline in America, which led to a slight relief at the end of the summer travel season, but those prices are still hovering at $4.16 a gallon nationally.
Although the United States has been, according to the US Energy Information Agency, the world’s largest oil producer since 2018, including crude oil, other petroleum liquids, and biofuels, it is still far from self-sufficient and imports huge quantities of oil.
It is expected that with the increase in investments in fossil fuels and more reliance on renewable energy sources, America’s dependence on imports will decrease, but nonetheless there are those who wonder why the United States continues to import crude.
Rystad Energy, a private energy research firm, found in a 2020 analysis that oil fields in the Middle East have the lowest production cost in the world at $31 a barrel, while the cost of extracting a barrel of oil from deep waters in America is $ 43 a barrel. His brother has a barrel of shale oil that costs more than $44 to extract.
The second reason is that most of the American production is from light crude, which is a light oil, which means that it contains a low percentage of sulfur and has a lower density, while the main Russian Urals crude is rich in sulfur, a crude that American refineries deal well with.
Most of the high-sulfur crude that the US needed came from its closest neighbors – Mexico and Canada – but refineries sometimes demand more from the market, especially after America was importing that kind of crude from Venezuela and then Russia before a ban on petroleum imports from both countries.
According to Bloomberg, when the United States was importing Russian oil, it tended to flow to refineries located on the east coast and west coast, away from the heart of the oil and gas center in the Gulf Coast region.
Refineries on both ends of the country rely more on imports to meet their crude needs because pipelines from production centers in Texas and North Dakota to the coast are limited.
In addition, the Jones Act requires US-flagged ships not to move cargo between US ports, limiting the ability to ship US crude oil to cities along the coast.
The story of the “strategic reserve”
But despite this, America still maintains a large stock of oil, as the strategic oil reserve in 2019 contained 645 million barrels, making it the largest oil reserve in the world.
In 1975, the late US President Gerald Ford signed a law to create the first emergency crude oil reserve in the United States after the country was shocked by an oil embargo a few years ago due to the repercussions of the October war between the Arabs and Israel.
According to CNN, the strategic reserve consists of 4 sites along the coasts of the Gulf of Texas and Louisiana that contain deep underground storage caves, with a depth of between 2,000 and 4,000 feet below the surface, and the largest amount of oil that the strategic reserve ever held was 727. million barrels in 2009.
And no one but the President of the United States can issue an order to allow the use of the Strategic Petroleum Reserve, something that has happened very few times, the last of which was when the current president, Joe Biden, allowed in late March one million barrels of oil per day from its reserves for a period of six months, which is a historic volume. It underscores the White House’s concern about high energy prices and supply shortages in the wake of Russia’s invasion of Ukraine.
The White House said at the time that Biden would invoke “Cold War powers” to encourage domestic production of vital minerals for electric car batteries and other uses. The battery materials will be included in the list of items covered by the Defense Production Act of 1950.
The White House said in the statement that the release of the Strategic Petroleum Reserve was “unprecedented.”
“This record draw will provide a historic amount of supply to serve as a bridge until the end of the year when domestic production will rise,” he added.
Biden had directed, earlier in March, to urgently withdraw 30 million barrels of US oil reserves and put them on the market, as part of the collective action of the International Energy Agency.
The US Department of Energy’s Office of Fossil Energy and Carbon said at the time, “This operation is part of coordinated work with 30 IEA member countries to release 60 million barrels of their strategic oil reserves.”