Over the last year and a half, gasoline and fossil fuels have gone up in prices drastically. Fuel has been up over 200% but is currently around 184% up from 2020. From 2019, we are up around 153%. Natural gas on the other hand is up 345% since 2020. This information comes from the U.S. Energy Information Administration. Why am I telling you this? I promise it is not to depress you, it is to show you our current situation and why it is most likely going to get a lot worse.
The strategic petroleum reserve (SPR), is an emergency stockpile of petroleum, managed by the US department of energy. It is the largest emergency supply in the world (714 million barrels), which is stored in underground tanks and salt caverns. The current petroleum reserve is at the lowest it has been since 1984 (405 million barrels), with 15 million being taken out this fall. Leaving us with 390 million barrels of petroleum.
How did we get this low? President Biden on March 31st 2022 after talking with allies and partners, decided to put 1 million additional barrels on the market per day for the next 6 months (180 days). By doing so, they hope to relieve the pressure at the pump for so many struggling citizens. This was in response to “Putin’s Price Hike at the Pump”. Since Russia invaded Ukraine, gas went from about $3.30 a gallon at the beginning of the year, to $4.20 by the end of march 2022. The U.S. put a ban on Russian import of oil, which was a large daily importer. However, not as big of an importer as we may have been lead to believe. Listed below is the top ten importers of oil to the U.S. per day.
Canada — 4,783,000
Mexico — 645,000
Saudi Arabia — 550,000
Russia — 405,000
Colombia — 228,000
Iraq — 223,000
Ecuador — 219,000
United Kingdom — 126,000
Nigeria — 110,000
South Korea — 102,000
We received roughly 8.5 million barrels of crude oil per day from July-December 2021. The U.S. is the worlds largest crude oil producer coming in at 12.108 million barrels per day. However, we are also the largest consumer of crude oil, at 19.69 million barrels of crude oil per day. So… Russia contributes less than 5% of our daily oil importation. How did this make our gas prices in the U.S. go up by a dollar a gallon? We would just need to figure out how to produce 405,000 more barrels of oil a day, or find another country to import from. Yet, it seems that the less than 5% import from Russia a day skyrocketed our prices. So, my question is, if we are lacking 405,000 barrels of oil a day, why would we be taking more than 405,000 barrels a day, out of the SPR? Two viable options could be, we are exporting to other countries or other countries are not importing as much to us.
So, in the last 180 days, we have taken 180 million barrels of crude oil from our emergency stockpile at the SPR. Making us have the lowest emergency reserve since 1984. With the supply around 400 million barrels, we have roughly 20 days of consumption in our reserve. However, we can only access 4.4 million barrels a day. Leaving us with 91 days until the reserve is out if we needed to access it in an emergency situation. This is telling me two things.
One, we should not be using our reserve, since high prices are not an emergency. An emergency is not having oil.
Second, we really need to figure out our oil consumption in the U.S. We consume 19.69 million barrels a day, the next largest consumer is China at 11.75 million barrels a day, the third largest consumer is India at 4.489 million barrels a day. Why do we consume at such an exponential rate compared to the rest of the world. We consume 15-20% of the worlds total oil.
Why does any of this matter? We need to start solving the real problems in our country. Why is our consumption rate so high. How can we get this consumption down, so we can be energy independent? How can we cut our oil consumption down to 12 million barrels a day?
Next, we now have to refill our SPR. We need to fill this with approximately 300 million barrels of crude oil. How much will this make prices go up at the pump, once we quit artificially pumping oil into the economy? Then if we want to refill our reserve at the same pace we depleted it. How much will gas at the pump be, when we need to import an extra million barrels of crude oil a day, for 300 days?
I expect, along with multiple other sources, we are going to see a major hike in gas prices after the midterm elections. I find it quite the coincidence, President Biden artificially lowered gas prices for the 6 months leading up to the mid-term elections. It almost seems like it was staged, to look like we have lower prices.
We need to figure out our consumption issue in the U.S. and get some credible people in government who can start working towards solving the real issues.
Your life Tutor