“The cost of crude oil — and gasoline— began to climb over the past month as Putin massed forces on the Ukrainian border. The diplomatic back-and-forth has whipsawed financial and commodity markets as investors try to price in what an armed conflict and U.S. sanctions against Russia would mean for the global economy.”- US News and World Report- Associated Press- Feb. 16, 2022, at 2:13 p.m
That was the speculation from AP writer Josh Boak last February. Now, early in March, the Russian armed conflict has moved from Josh’s quite accurate forecast to reality.
California just topped $5 per gallon at the gas pump and NJ and Pennsylvania are experiencing record highs in line with the soaring national average now climbing above and beyond $4.00 per gallon.
Even prestigious investment firms such as JP Morgan underestimated the impact of the conflict on crude oil prices. Already at about $95 a barrel before the Russian invasion, top investment firms were warning that crude prices could exceed $125 a barrel due to tight supplies, a shortage which an invasion would intensify. And it sure did, and then some.
This morning crude broke the $130 per barrel mark, and some analysts are warning that a $150 price is on the horizon.
Biden’s Keystone Karma- We Told You So Joe!
At Resource Erectors we’ve been keeping an eye on “the Keystone Shutdown Effect” since the 2021 Biden executive order cut off this essential energy branch in order to accelerate the country toward all-green infrastructure.
Now, with Russian oil supplies pinched by global politics, the oil industry is experiencing “one of the wildest weeks ever” and Biden’s pipeline shutdown goes down in the books as looking more foolish than ever.
According to a report at Oilprice.com :
“Oil markets experienced one of the most volatile weeks in recent history, and there is no sign of things slowing down anytime soon.”
Let’s take a look at what will help and what won’t as we buckle up for a wild energy ride sure to give US consumers and industries an acute case of pumplash in what’s turning out to be a turbulent 2022.
An Iranian Drop in the Russian Oil Bucket Won’t Help
Rumors of a nuclear deal to secure Iranian oil are moot. Even if the dubious “Iran nuclear deal” goes through, allowing Iran to export oil once again, Iran doesn’t have near the production capacity to replace the barrels lost to a Russian ban. Literally, an Iranian drop to replace the deep Russian oil bucket that won’t be available to the world market.
Proposed bans on Russian oil by world politicians are adding fuel to the skyrocketing oil price fire kindled last year by the Biden administration and the questionable wisdom of the Keystone Pipeline shutdown, even as the economy was already in the throes of covid shutdowns. Now House Democrats are considering a bill to ban Russian oil and other exports. Even without official legislation, many corporations around the world are “self-sanctioning” by boycotting Russian crude oil and other products.
The solution to easing the price at the pump, or at least holding the line through the volatile energy times ahead isn’t the Middle East. The solution may be right here at home.
Tapping US “Seas of Oil” Reserves Will Help
While mainstream media places all the blame for “pumplash” consumer outrage on the Russian invasion of Ukraine, the US may be sitting on more oil than Russia and Saudi Arabia combined. More even, than all of China’s untapped oil resources nationwide, thanks to advanced fracking technology and abundant shale deposits.
“There are seas of oil just waiting to get tapped once oil prices rebound”, according to an informative article at ATMOS International.
“Thanks to the shale oil boom, the US is now sitting on more oil reserves than Russia, which estimates as having 256 billion barrels of untapped oil. The next-richest countries in terms of oil after that are Saud Arabia (212 billion), Canada (167 billion), Iran (143 billion) and Brazil (120 billion).”
Texas holds more than 60 billion barrels of shale oil alone, more than China. North Dakota, where the Bakken shale oil play sits is another resource-rich shale oil state.
Let’s hope that $130 per barrel is motivation enough to open the US shale oil investment tap again.
Reopening the Existing Keystone Pipeline Will Help as California Tops $5 a Gallon
Too bad we can’t get to our own oil reserves, (or it can’t get to US) thanks to the hyper-green enthusiasm of the Biden administration. But if there’s any silver lining to the cloud of conflict in Ukraine it’s the renewed call to reopen the Keystone Pipeline.
In Pennsylvania, three US senators are urging the Biden administration to rethink its untenable opposition to the Keystone XL pipeline in light of Russia’s invasion of Ukraine. Senators Wayne Langerholc, R-Johnstown; Joe Pittman, R-Indiana; and Gene Yaw, R-Williamsport, outlined plans to introduce a resolution urging President Joe Biden to reopen the Keystone XL pipeline.
While spiking oil prices are painful to endure at the pump, for now, they can make it worthwhile for energy companies to go after shale oil again while focusing attention on the importance of a secure domestic energy supply chain and US energy independence. These are industrial energy arteries that are essential to maintaining the heartbeat of a healthy world economy now more than ever.
About Resource Erectors
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For the top professionals in heavy industry sectors, we have positions available with competitive salaries commensurate with your talent and experience offered by North America’s industry-leading companies.
When you’re ready to join or build your next professional dream team you’re ready for Resource Erectors so don’t hesitate to contact us today and we can all get to work.