A while back I wrote an article about “Looking for the Greater Good”. I was truly bothered by the selfishness of Americans and the fact that we have somehow decided that me, me, me, is where the arrow of our moral compass seems to point, rather than looking out for the greater world society.
I came back to this topic when I listened to all sides arguing about a complete ban on purchasing Russian oil by the United States.
When the war began the reasoning behind the present Administration’s decision to continue to purchase oil was that prices are already too high at the pump and a decision for a full boycott would exacerbate the situation and aggravate the American people.
Fortunately, this administration is slowly finding its moral compass and has banned the purchase of oil from Russia by the US government.
I say slowly, because there is much more we can be doing, but we have a large part of America that still finds sacrifice for the greater good an anathema to their way of life.
I can hear the bitching now, it is all Biden’s fault that gas prices are high. Another ridiculous statement created by an opposition party that simply wants power, not logical discourse. Oil is an international commodity and its prices are not set by one country or one individual.
The ban on imports will take place on March 15th. The administration has put forth ideas to lessen the sting of the move, but we can expect some pain for a while to come.
At present, our high prices are several fold. First, OPEC is not raising supplies, their intent is to keep production at a profitable level. In the U.S. independent producers are also reluctant to ramp up production due to bankruptcies and continued pressure from stockholders for higher returns.
Scott Sheffield, CEO of the largest shale oil company, Pioneer Natural Resources, has said that the industry would not increase production this year due to "demands from Wall Street that operators use their oil price windfall to pay dividends." Ah, good old capitalism.
Northeastern University energy expert Jeffery Born: “In short, I think we are having supply-chain problems. I’m sure Joe (Biden) wants prices to come down — you and I do, too. I’d also like to be 20 pounds lighter tomorrow.”
Demand is another side of this issue. In the US electric cars makeup only 2% of cars sold, and hybrids a mere 4.9%, so we, as a nation, are still guzzling gas as though it was our god-given right to destroy the planet with carbon-spewing means of transportation.
The EU has limited its imports of oil from Russia, but as of now, has not called for a complete ban. They have issued a statement saying that it will cut its dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies of the fuel “well before 2030”. Many countries in the EU fear economic collapse should a full ban take place. After all, the EU imports 90% of its natural gas with Russia supplying almost 40% of EU gas and a quarter of its oil.
One country taking a strong stance is Germany Their Federal Minister of Economics Robert Habeck has said, “We will have to buy more gas, but also coal from other countries” which will inflate the cost of transportation and home heating, but the majority of Germans think that’s a small price to pay to stop funding the assault on Ukraine”. Oh, how I wish Americans understood sacrifice goes hand in hand with global freedom and democracy.
While both houses of Congress have signed an agreement to the ban there is still one member whose comments show they only have their own interests at heart. The argument is that they would agree if the US will open federal land, endanger vital natural resourses and throw mud in the face of the Native American people by re-opening the Keystone pipeline. A pipeline that brings dirty oil tar from Canada to the Gulf Coast for processing and export.
This is an insulting power play. It would take years before anything would result from the building of the Keystone pipeline, and the pollution from it would be devastating.
The American Petroleum Institute (API), the lobbying arm of the oil and gas industry, is pushing the US to roll back environmental protections, in a quid pro quo for its supporting the embargo.
What would be far more heartening is if people in Washington used this opportunity to throw money at alternative renewable resources that help to mitigate the disaster at hand and climate change. However, as long as we have members of Congress beholden to the oil industries this will not happen. At present, 28 U.S. senators and 100 House member’s households own stock in oil and gas companies or hold other investments in the fossil fuel industry.
Again, me, me, me, and the hell with the greater good.
How does this affect all of us economically? Russia exports in the neighborhood of 5 million barrels of crude oil a day (12% of the world’s total) The profits, ever-climbing as the price of oil climbs, amounts to about ½ billion dollars a day, the US portion of that is around $10 million a day.
So, blocking Russian oil imports into the US will be negligible. But it does send a message of strength, sacrifice, and kindness to the Ukrainians and is the morally correct thing to do.
There is another component to this, not really discussed as the oil companies tend to send out PR reports filled with dancing fairies and blooming flowers, but the truth is Russian oil goes primarily to high-sulfur-tolerant older refineries, unlike Texas Sweet Crude. Russia's high sulfur oil is filled with impurities, so refining it requires specialized equipment and it can't be sold just anywhere
Higher prices have nothing to do with the man that sits in the White House, but with the oil companies themselves.
As mentioned, the US has very little exposure to Russian oil and gas, we truly are energy independent. We import no natural gas from Russian and Russian crude oil imports amount to just 1% of our crude oil imports over the last decade. In fact, the US has been a net exporter of oil and petroleum products since 2020. Appalling to me is that we are also a net exporter of coal.
In 2021, every day, the US exported 2.8 Billion cubic feet of Liquified Natural Gas to Europe. The US exports of crude oil and petroleum increased by 40 percent in the same period.
Next is the fact that the US oil and gas companies are doing an outsized booming business. Oil production is up 20% from a year ago, and production numbers are continuing to rise. Natural gas production hit a record high in December, and oil prices are hitting peaks not seen since 2014. With all of that, the profits of oil companies are soaring.
On February 20, 2022, the Financial Times reported that the seven top oil companies, including BP, Shell, ExxonMobil, ConocoPhillips, and Chevron, would return a near-record $38 to $41 billion to shareholders through stock buybacks, after distributing $50 billion in dividends. At the same time, the Wall Street Journal warned of a post Covid increased demand, a portent of increasing prices.
The number of rigs drilling new wells has jumped by 10% since the start of the year and the International Energy Agency predicts total U.S. production in 2022 will break records.
This is in rather stark contrast to the oil companies saying prices are high because they need to drill more but can’t due to a lack of places to do so. THIS said with a straight face while there are 9000 gas and exploration leases on public lands (that number does not include available offshore leases) permitted, ready to go, and yet sitting idle.
The position of the oil and gas companies is just a chess game hoping to wheedle more concessions from the government’s federal and gas leasing policies. But in doing so they sound like screaming children complaining about the rules being rigged, all the while shoving billions of dollars into their pockets.
I understand the Biden administration’s wariness of anything that causes gas prices to rise, look what happened to Jimmy Carter and the Arab Oil Embargo, but too bad Americans, suck it up. Ukrainians are in the middle of a gruesome war where obvious war crimes are being committed, and we are upset about the personal economic impact of filing our gas-guzzling SUVs and pickup trucks?
Please don’t put up Ukrainian flags and spout your support while bitching about the sacrifices you have to make. While many have lost a sister, brother, or child to war, the US as a whole, has really never suffered from war. If you can afford as much as $75,000 for a Dodge Ram pickup truck, remember that a shock at the pump, or increased price of almost everything, is nothing compared to a bombed-out home, children being loaded on buses and trains as they wave goodbye to their fathers, or frightened humans huddled in subway stations.
While Musings of a Mysterious Mind usually only posts on Monday mornings things are happening so fast in the world right now, I may be posting more randomly as things in Ukraine unfold. Thank you so much for subscribing and feel free to share this post.
As we watch from miles away what is occurring in Ukraine, feeling hopeless, here is a list of charities working on the front line.
Medicins sans Frontières /Doctors without Borders
Fundacja Ocalenie - The Rescue Fund in Polish
I would say that high gas prices are due to: 1. People continuing to consume at high levels; 2. The cartel acting in its best interest; and, increasingly going forward here in the USA, 3. Inflation.
I am in favor of higher gas prices to force people to consume less. But no sane politician is going to run on that platform.