The United States is producing record amounts of oil. So why can a war thousands of miles away still make Americans pay more for gasoline?
Fair question — especially since Team Trump’s had this oil-independence flex on loop for a while.
There are three really simple answers. Here’s the simplest one: oil independence doesn’t mean market independence.
Oil independence is not a flex in a global oil market
Sure, America produces plenty of oil.
But American oil isn’t priced only for American buyers. Oil is sold in a global market.
If buyers around the world are willing to pay more for oil, American producers aren’t going to sell American buyers the same oil at a special “America-first” discount.
That’s how capitalism — er, the market — works.
Not all oil types are the same
The next reason is still simple.
In the world of oil, “production” means pulling oil from the earth. “Refining” means turning oil into products to be used by others.
America still imports plenty of oil while producing lots of it.
America produces lots of lighter oil. But many American refineries were built to process heavier oil.
So the country can export some of the oil it produces while importing another kind of oil at the same time.
Which means declaring “oil independence” can mean different things.
What about “Drill, baby Drill”?
Nah, America can’t drill their way out of high oil prices — at least not right away. Drilling more oil today doesn’t put more gasoline at the pump tomorrow. Even getting already-discovered oil into production can take time.
The point about oil independence that’s missing — in plain talk
America can produce more oil than anyone else and still pay the world’s price for oil.
That’s the part all the “energy independence” chest-beating leaves out.
If you want a slightly more complex explanation — with photos — of what I just wrote, read this piece from Yahoo Finance.
song currently stuck in my head: “is this love?” – adrian younge, joyce moreno, and tutty moreno
