Top 5 questions about oil and gasoline prices

1. How does the oil supply work? “Why are we so affected?” asked Alyce.

HOUSTON – “It’s first important to note that the price that we pay at the pump is largely a function of the price of crude oil,” said Frank Macchiarola, with American Petroleum Institute.

VIDEO EXPLAINER: Why you’re paying more for gas and groceries

Macchiarola added, “We produce crude oil here in the United States, about 11 and a half million barrels per day. But we use about 20 million barrels per day here in the United States. So some of the crude oil that we use, we get from other countries. The vast majority of that those imports come from Canada. Some of it comes from the Middle East, some of it comes from Russia. About 3% last year of our crude oil that we imported came from Russia.”

“This is not an American problem. This is a global problem,” said Brian Sullivan, anchor for CNBC. He added, “Europe, in many ways is in far worse situation than we are with regards to natural gas and gasoline. And it’s amazing to have people here [at CeraWeek] from literally all over the world, Middle East, Asia, Latin America, Europe, United States, trying to come together to perhaps use the industry to help blunt some Putin’s impact and try to mitigate some of the damage that is being done to global economies.”

2. “What about our reserves?” - J. Costanza

“Sure, That’s a great question,” said Macchiarola. He added, “The United States has what’s called a strategic petroleum reserve. It’s largely established to provide stability. When there’s market volatility, disruption due to extreme events, there’s a supply-constraints so to speak. And so that strategic petroleum reserve was tapped by the administration recently and we coordinated with other countries. But that amount of 60 million barrels really only equates to about three days of consumption here in the United States. So, it’s going to have some effect, but not a large meaningful effect… So we need to produce more here in the United States to be able to bring supply and demand into balance.

3. Is there a way to do that on short notice?

“Absolutely, and the United States producers are already doing it,” said Macchiarola. He added, ”We’ve ramped up production over the last couple of years. Rig counts around the country are up nearly double year over a year. The Permian Basin here in Texas, the most prolific basin in the United States, production in that basin is near or at historic levels. So, it is happening. It’s going to take some time. But you’re seeing the market respond. But there are certainly headwinds, there are labor constraints, there are supply chain constraints, just like other industries, the oil and gas industry is facing supply constraints in the post pandemic world. And so as those constraints start to be alleviated, and has we bring production back up and as demand levels out, so to speak. And of course, as the disruption in Ukraine, hopefully is mitigated. Those are some of the factors that are going to help bring down or stabilize prices and help rebalance supply and demand.”

4. Where else can we get oil? “We should have never closed the keystone pipeline,” said Joyce.

“Well, Alberta really is part of the solution,” said Energy Minister Sonya Savage of Alberta, Canada. She added, “We have the third largest reserves in oil on the planet. We’re right next door. We’re the largest trading partner for the United States. We’re your largest source of oil imports already. And we’re reliable. We’re right next door and we’re moving towards lowering emissions… We just need to be able to get infrastructure built.”

5. Is there room in the world for oil and clean energy?

“Green energy is great until you can’t afford to get to work or feed your family. Drill here; Drill now!” said Jacque.

“You don’t want to let this also become an economic tragedy,” Sullivan. He added, “Inflation is something that disproportionately impacts lower income people. They pay the same price for gasoline as rich people. And as the price of gas and other commodities goes up. It gets harder for them.”

“And there’s a real opportunity here to do a reset on energy policy. Over the past decade, energy policy is focused almost exclusively on lowering emissions and addressing climate change,” said Savage. She added, “That’s still important. We can’t slow that down. We can’t give that up. But we also have to pay attention to energy security. Otherwise, the United States ends up in a position where they’re importing barrels from Russia... They turn to Venezuela to ask Venezuela for additional supply. They turned to Saudi Arabia for additional supply when we’re right next door. So it really emphasizes the need to focus on energy security.”

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