Soared gas prices in America: Why?

For years, the American oil industry has been touted as the key to achieving energy independence.

The United States is the world's largest producer of oil, with Saudi Arabia following closely behind as the second-largest producer.

The move sent gasoline prices skyrocketing to all-time highs.

But the United States does not import much petroleum from Russia.

The U.S. being energy independent simply means that it exports more energy than it imports, not that it is completely independent of the global energy market.

Patrick De Haan, head of petroleum analysis at GasBuddy, stated that oil is a global commodity and that the U.S. cannot be isolated from the global system. Similarly, the country cannot remove itself from the computer chip shortage situation. Even if the U.S. produces some supply for computer chips, it does not resolve the issue's drastic impacts on supply and demand outside of its borders.

The Strategic Petroleum Reserve in the U.S. contains approximately 700 million barrels of oil, which is equivalent to a one-month supply for the entire country. President Biden has authorized the release of oil from this reserve twice, but its impact has been minimal in the long run.

While Russia is among the globe's leading oil exporters, just approximately 8% of the U.S.'s oil imports originate from Russia. Russian oil represents roughly 3.36% of the 20 million barrels the U.S. consumes daily. In contrast, 50% of imports stem from Canada, as per the U.S. Energy Information Administration.

The 8% of U.S. refineries that were designed before the domestic oil boom are still important in their own way.

The crudes produced mostly in the U.S. today are typically lighter and sweeter, with a faster flow rate and lower sulfur content compared to many other varieties.

Many U.S. refineries were constructed for heavier, sulfur-rich crudes, which are no longer common. As a result, these refineries perform most efficiently using heavy sour crudes imported from other countries.

When oil prices increase, the U.S. cannot rely solely on pumping more crude to lower them. The only way to significantly increase production is to drill, which requires investment. However, oil companies have been hesitant to spend capital and short of personnel due to years of boom-and-bust cycles and the coronavirus pandemic's demand crashes.

Ramanan Krishnamoorti, a professor of petroleum engineering at the University of Houston, stated that in order to revive the industry, we must find ways to reskill and retool workers, as well as improve the regulatory certainty to attract capital.

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