I wrote a piece back in May regarding the Colonial Pipeline hack, and why Louisiana and other areas made it through the Great Gas Shortage of 2021 better than most. Now it’s November, and we’ve been watching gas prices steadily creep up, and now President Biden has a temporary measure to control the gas prices. Releasing 50 million barrels from the US Strategic Petroleum Reserve may sound great and generous, but this is just a temporary band-aid on a problem that has a more permanent solution readily available.
In the article “Shortage of Sense” I attempted to make the point that due to Louisiana’s refinery-heavy position in our country, we weathered the gasoline shortage better than other places, like Georgia, who saw more problems. If we take a step back and look at the US oil and gas industry as a whole, the same logic should apply. Our country is a massive oil producer in the world, and we have the means to continue to produce and refine our own oil without having to import so much. The benefit here is that we don’t pay a premium at the pump for something local.
It’s like paying for shipping on beef from out of state, when your neighbor has a cow and a butcher connection. It doesn’t make sense to outsource something we could be making at home. But sometimes you cannot avoid going to someone else for what you need, and that illuminates other actions by the Biden administration.
Gasoline is only one by product of oil. We still have other uses that require different types of oils. To get those in, pipelines prove to be an important infrastructure. Canada has been the largest exporter to the US in this area. This is beneficial as they are so close. But we stop the pipelines and continue restricting other methods of transportation, we will have to be giving the Middle Eastern oil countries our business. It’s surely more difficult and more expensive to import oil from the Middle East than Canada. Keystone XL made headlines in the last couple of years, and especially earlier this year when it was shut down. There are other pipelines that are under pressure from either state or national figures to cease operations. Unless these are replaced with competent alternatives, we could be looking at price increases for a bunch of products besides gasoline.
We could play the “What if” game until the cows come home when it comes to imagining the different financial and economic repercussions of messing with pipelines, restricting leasing to operators, and imagining the ways OPEC will try to counter the influx of 50 million barrels into our supply. The only “What if” game I think is worth playing is this: What if we continue to rely on American oil for American needs? What if we make moves to stand on our own legs and remain as energy independent as possible? I don’t believe that there is any situation in which it is better to be dependent on someone else than it is to be independent and self-sustaining. A cycle of dependency can be hard to break.
Sources:
https://www.tcenergy.com/operations/oil-and-liquids/keystone-pipeline-system/
Biden administration clarifies it’s not weighing Line 5 shutdown
Bayou Observant 