What ever happened to “energy independence?”
When gasoline prices spiked to over $4.00 a gallon in 2008 and 2012, “energy independence” was Big Oil’s favorite political marketing slogan Americans were sold a con job (imagine that!) about reducing dependence on Saudi Arabian oil by substituting imports from our friendly neighbor to the north, Canada, and by fracking the hell out of shale formations around the US.
What happened since then?
US imports from Canada increased, Saudi imports decreased, and widespread fracking was introduced in Texas, Oklahoma, Colorado, Wyoming, and North Dakota.
Then the oil boom went bust when the global market for crude collapsed in 2014 and 2015. Spot prices sank from $105/barrel in July 2014 to $35/barrel in December 2015 and as fracking became unprofitable, US production fell and imports rose again.
The market recovered somewhat to its current level of $70 a barrel and US production increased again to near record levels, today. However, imports are also rising now, too.
Why?
For one thing, the US has been exporting ever increasing amounts of crude since 2016, a record 66 million barrels in July 2018, No doubt, most Americans would say it defies common sense to import and export crude oil, at the same time, if they knew about it.
The US is now the only country on Earth that doesn’t produce enough crude to meet demand but exports it, anyway. On the surface, it sounds unbelievable.
There are many explanations for this bizarre situation. Here’s mine:
Exporting crude oil is one way to exert geopolitical power in the world for countries that wish to do so.
Take Saudi Arabia, for example. It’s production capacity far exceeds domestic demand but it doesn’t simply sell the excess abroad. It uses crude oil to exert geopolitical power by regulating production, up or down, to work the levers of the global market. This is dangerous, considering the despotic nature of its leaders and the similar nature of Donald Trump.
In the 12 months from July 2017 to July 2018, the US imported 275 million barrels of crude oil from Saudi Arabia or 750,000 barrels a day.
According to the EIA, each barrel yields 20 gallons of gas and 11 gallons of diesel fuel. That comes to 15 million gallons of gas and 8 million gallons of diesel a day.
It’s sold at the pump where the farthest thing from most Americans’ minds is the source of the product they’re buying. When Americans drive up to the pump at their local gas station, there’s no sign that says where the gas came from. But it’s possible to find out by looking at the refineries that supply our gas stations.
The EIA tracks US refineries and the source of the crude oil that they process. And most refineries distribute the gasoline they produce to specific branded gas stations in a geographic area, which can be found on their websites.
The EIA identified dozens of refineries that have imported Saudi crude. 29 of them imported Saudi crude in the last 12 months.
Three refineries imported more than half of all the crude supplied to the US by Saudi Arabia.
The largest importer of Saudi crude is Motiva Enterprises, a wholly owned affiliate of Aramco, Saudi Arabia’s state-owned oil company. Motiva operates the largest refinery in the US, located in Port Arthur, Texas.
On its website, Motiva says:
- “We market gasoline and diesel through more than 5,000 Shell-branded service stations across Texas, most of Florida, the Southeast and the Mid-Atlantic markets,” and
- “We now offer the 76® brand to our entire operating territory, including 26 eastern and Gulf Coast states, as well as Washington, D.C.”
Chevron was the second largest importer of Saudi crude in the last 12 months. It’s refineries at El Segundo and Richmond, California process it.
On its website, Chevron says:
Phillips 66, ExxonMobil, and Marathon also operate refineries that produce gasoline from Saudi Arabian crude, mostly located along the Gulf Coast and in the Los Angeles and San Francisco. Their branded gas stations in those areas sell gas produced with Saudi crude.
Since it’s unlikely that Trump would sanction Saudi Arabia for killing a journalist, or anything else that it government does, the matter is up to consumers.
I say BOYCOTT.