Russia-Ukraine War Exposes American Reliance on Foreign Oil

Irritated by soaring diesel prices at the pump, it’s easy for truckers to get swept up in the political theater surrounding the Russia-Ukraine conflict. The hard oil production and consumption data indicate the overseas war has little — if anything — to do with skyrocketing fuel inflation. But the geopolitical tragedy does present an opportunity to take a long hard look at America’s unnecessary reliance on foreign oil.

Although oil prices surged over $100 per barrel during the initial days of the conflict, it’s important to understand the White House did not level sanctions on Russian oil producers. European countries who expressed outrage over the invasion also abstained from the self-inflicted fuel prices increases they would experience at the pump. Reports indicate that Wall Street traders sidestepped making deals around Russian oil due to potential volatility. Basically, Russian oil amounts to a bad bet.

So, why is Pres. Joe Biden talking about releasing U.S. oil reserves in the context of an exclusively European war?

The facts are that U.S. consumption exceeded 18.19 million barrels per day in 2020, according to the U.S. Energy Information Administration. That number may be above 20 million now that the pandemic is in retreat. On the domestic production side of the equation, America’s highest crude oil production peaked at 12.9 million barrels daily in November 2019.

Reduced consumption during the height of the pandemic and politically-driven winds blowing against fossil fuels appear to have impacted U.S. crude oil production. The country managed only 11.5 million barrels daily in December 2021, which stands well below the industry’s potential. In other words, America has not continued its energy independence trend that started in 2016 and remained upwardly mobile until the pandemic disruption.

The White House and foreign allies recently agreed to release approximately 60 million barrels from strategic oil reserves. The U.S. reportedly has 582.4 million barrels in reserve. Some estimate the total American reserves would cover the country’s typical consumption for less than one month. It may, however, provide several months of import relief from imports.

But here’s the rub. The U.S. only imports 245 million barrels of oil from Russian sources in an entire year, and the imported fuel resource was not necessarily subject to preliminary sanctions. It is reportedly true that Russian oil imports increased by 24 percent from 2020 to 2021. That is largely because domestic production has not returned to 2019 levels.

The average cost of gasoline rose to $3.61 per gallon by March 1, and diesel edged over $4. Truckers paid $2.948 on average one year ago, according to AAA. Few disagree that transitioning to sustainable energy sources would improve the environment. But the hard data indicates the country remains vulnerable to the whims of other oil-producing nations and geopolitical events. America appears to be overly reliant on foreign oil without good reason.

Sources: wsj.com, reuters.com, cnbc.com, cnn.com