Why the U.S. Can’t Use the Oil It Produces

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we're closing the border and we're drilling drilling Drilling and you keep us moving towards energy Independence our country must cut back its Reliance on foreign oil I said we're going to need oil for at least another decade see and beyond that we're going to need it based on how much politicians talk about oil and using the oil reserves I always kind of thought the US was running out we've got a about 35 years worth of oil left in the whole world but I couldn't be more wrong in just the 10 years after 2008 the US went from a place with slowly dropping oil production to more than doubling its output and reclaiming its spot as the biggest oil producer in the world but there's something peculiar the US is sending away nearly a third of its oil just to get it swapped out with oil from somewhere else this is the story of America's wild oil Revolution and why it still won't give the US Energy Independence this video is brought to you by Reed W own but more on that a little later to understand America's relationship with oil let's start with a quick crash course so for most of the last 150 years the US has been the place to get oil we drilled almost all of it and we also used the most oil in the world but in the late 1930s other countries namely Saudi Arabia and a few other Middle Eastern countries realized they also have tons of oil so they started drilling like crazy around this time the US starts importing a little bit of oil but it still drills most of it itself but America's ravenous demand for oil to fuel its Planes Trains and Automobiles can't be contained America's demand for oil starts significantly outpacing us production so bring in the Imports pretty quickly the US becomes increasingly reliant on foreign oil but then in 1973 after the US gave money to Israel Saudi Arabia's enemy in the yam kapore War they and other AR Arabian oil exporters were like actually no more oil for you an Imports slide theil us doesn't have enough oil to make up for this loss so there's just no oil for consumers gasoline stations ran dry empty gas pumps no more road trips to be sure that there is enough oil to go around for the entire winter all over the country it will be essential for all of us to live and work in lower temperatures the problem was so bad that President Nixon literally told businesses to stop working if it would save energy I am directing that the daytime temperatures in federal Offices be reduced immediately to a level of between 65 and 68° and that means in this room too and with this the US really starts talking about this thing called Energy Independence and the US is crippling lack of it to respond Nixon bans oil exports from the US and makes a plan to build 1,000 nuclear power plants by the year 2000 according to one estimate if all of these nuclear power plants were actually built the US would be able to meet twice its energy demands in 2022 with no fossil fuel emissions from the production but instead there's 54 anyway in the meantime the US needs more oil because those gas engines aren't going to run themselves but that's a little awkward because the US still can't find that oil in its own soil we start importing more oil from Canada our pretty peaceful neighbor but our oil habit still requires we bring in a bunch from the Middle East it's in this context slowly getting more oil from Canada using a lot from OPEC countries and not getting much here that perfectly sets up a revolution so as you can see the line that I'm on right now is going down and a similar thing is happening with natural gas the other big fuel source we use in America that's collected largely the same way as oil you'd think that it's going down because we're out of oil but that's actually not true at all the US had and still has tons of oil the problem was we couldn't get it this is The Barn at shale it's a giant natural gas reserve around Fort Worth Texas and in 1995 the US government said it had just like a bunch of natural gas in it but it was unconventional see there are two ways that things we want tend to exist underground conventionally or unconventionally the conventional oil wells were just you know think about a big oil puddle underneath the ground you're just tapping it like a straw sucking it out if we still have plenty of weals like that like Saudi Arabia the Middle East they basically have that kind of oil in plentiful right that's why it's super cheap but this Barnett Shale is not like that it's made up of these big rocks called Shale that have natural gas and some oil trapped inside of them but the question is how to get in people have kind of known the answer for a long time was fracturing the rock or fracking even John wil's Booth a month before he killed Abe Lincoln was a fracker but the problem with early fracking was it didn't always work super well like for John W's boot he put some explosives into a well and made a huge hole but there wasn't a drop of oil left so naturally he left Pennsylvania and killed the president I guess see this is the type of anger not getting oil can give to people especially when they spend tons of money on it so in the late 1990s when this guy named George Mitchell was looking at his document that said all of your land and the Barnett Shale has tons of gas stuck in it but you can't get it he might have had murder on his mind he was hemorrhaging cash trying to get fracking to work when his team switched things up a little bit they used a newer technique of cracking open the rocks by shooting in a special water-based mixture and drilled sideways instead of just straight down with the perfect tweaks production gushed a revolution this finally made it fast and cheap enough to drill all of the Lush resources trapped in America's Shale for a few years producers were still skeptical but then in 2008 oil prices hit alltime highs interest rates hit alltime lows and from 2008 to 2018 the US doubles its oil production and in 2015 they lift the ban on exporting us oil which explains this graph this increase isn't 100% because of fracking but it's mostly fracking so this explains how we got to where we are where the US has a surprisingly high amount of oil because of this new technological innovation but there's still something weird going on the US produces pretty close to the amount of oil that Americans use and yet we send a huge portion of it out of the country just to get different oil from other countries and bring it back to America there's some strange Logistics that explain why this International oil swap is happening so the one remaining part that we still haven't really talked about between oil being in the ground and actually getting used is refining for any oil from anywhere to actually be used it first has to be refined otherwise it's just this thick black toxic sludge that really can't be used for anything so the refinery I'm going to right now will help explain why American Oil isn't always the best answer this is chevron's elsag gundo oil refinery which is one of the biggest oil refineries on the west coast and most of the oil it's cooking isn't American instead it's coming from one of these ships which sit a couple miles offshore and quietly get their oil sucked out through these big pipes in October of last year the most recent data we have this Refinery got crude oil from South Korea Argentina Guyana Mexico and Colombia and it's not just this Refinery another Chevron in California imported crude oil from Iraq Venezuela to Mississippi Canada to Michigan and even Texas the state that drills almost half of the US's crude oil imported 26 million barrels of crude just last October quick interlude this honestly probably won't help you that much but a barrel of oil is 42 gallons so kind of similar to a bathtub so this seems like a lot of work to just move all this oil around when we have it right here we just don't use it so why don't we use our own oil well there's a few reasons we don't so first of all a lot of American oil does stay in America like Texas drills a ton of oil and then refines it down the street then Texans can pump it into their pickup truck at a gas station when it's all really close like this almost all Transportation costs are gone which is why Texas has some of the lowest gas prices in the union but the first problem is that not all the oil is next to a Refinery and the refineries aren't always next to the people who need it we use Los Angeles as an example in 2021 California used 65 million barrels of oil the state happens to be one of the largest producers in the country so part of that oil comes from inside the state like a few miles from this Refinery is an oil field in the middle of LA and there are some other famously hidden oil wells that are scattered through throughout the city and next to people's houses but all of the oil drilled in California still only accounts for a fifth of what it needs so how about we just bring in some extra from Texas for most of the country there's a system of oil pipelines that take oil from the places where lots of oil is being produced to the people who want it but California is an exception the state and its almost 40 million residents have no crude oil pipelines coming in and they probably never will that's because even if the oil from Texas came to California most refineries in the state wouldn't be able to use it this is the biggest reason the US can't use its own oil it's just not the right type let me explain for Simplicity sake I got this from the explain like I'm five subreddit let's imagine there are two types of oil in the world one is strawberry and the other is chocolate for a long time the US produced a bunch of chocolate oil so to use it we also created a bunch of refineries that turn chocolate into gold not actually gold but you know what I mean [Music] but then over time especially with the use of fracking the US oil supply became a lot more strawberry and those chocolate refineries can't use that if they do they'll have some really big problems oil refiners could create more refineries if they wanted but according to one commentator the US government's environmental standards and push to abandon fossil fuels makes it a risky investment this might be why the last significant oil refinery build in the US was made almost 50 years ago so instead of going through the super expensive process of updating America's refineries to use strawberry oil refiners decided it would be a better idea to just import chocolate oil from other countries who still make it and use that in our chocolate refineries then just send all that strawberry oil overseas where they have refineries for it so this is why in 2022 59% of oil going to California refineries came from foreign countries and 80% of Elsa gundo oil originates abroad and despite exporting more the US still Imports pretty hefty sums of oil the real picture is more complicated than this like there's a whole range of differences in oil types and refiners don't just use one super specific type but the end result is the same the companies who buy and sell oil decided that keeping the same refineries in America and just importing the right type of oil just makes them more money than using oil from the states and that leads us to the final concern a lot of people have about American oil energy and depend energy Independence the concept of energy Independence is this really nice idea it gives these Vibes of ultimate control over one's Destiny no other country can decide whether we have power and it seems like it's just like The Logical answer if we make it ourselves it can be closer and cheaper maybe but the reality is that in a lot of cases it's just not it would be very very disruptive to the economy for the US to say all of a sudden we're not importing or we're not exporting we're just going to do you know we're just going to work with what we have the Chicago refineries would find they have no oil to refine it would take decades to sort that out it would be a mess biggest factor in gas prices is nothing more than the international cost of oil which the us only has a small part in determining and then beyond price just because oil is close doesn't mean we can use it you'll hear you know Joe Biden screwed up and that's why we don't have energy Independence but we never have had energy Independence and every country should worry about energy security you know that they have enough energy to meet the needs and demands of the economy of the people of the consumers the US has energy security focusing on energy security instead of Independence is why I've been slowly riding up this Canadian line for so long historically speaking it's a lot less likely that the US gets in a fight with Canada than it will a country in the Middle East so it's a pretty safe bet their oil will be there for us and as for our oil addiction as much as some people would like to stop using oil altogether the US is still highly dependent on it we have to do our best to March along this transition in a very determined way to make sure that not only we are mitigating climate change greenhouse gas emissions limiting local environmental harms but also keeping energy affordable we have to make sure that our most vulnerable communities are taken care of if the US keeps drilling oil here versus abroad the world might benefit somewhat from the country's relatively low greenhouse gas emissions from production but at the end of the day to curb emissions the oil needs to stay in the ground so I don't want to be sounding like a Brash you know just environmentalist who like we just need to do Clean Energy Technologies and just stop all fossil fuels that cannot happen overnight but it can happen faster than what we can think and what possibly the fossil fuel industry thinks it can happen and while America and the rest of the world are still figuring out how they'll find energy security let's discuss one other thing that needs security privacy and freedom I want to tell you about read WR own building the next next era of the internet a new book from entrepreneur and investor Chris Dixon Reed write own asked the consequential question who should decide the future of the Internet it's a question that's been increasingly debated as we grapple with the fundamental concepts of privacy and freedom in read write own Dixon argues an alternative to today's internet where blockchains reclaim control for people blockchains are for more than trading and speculating on cryptocurrencies they're a new kind of computer like construction material that could be used to build a better internet that can shift ownership of Digital Services from Big centralized platforms to decentralized applications that put people in charge read write own offers a vision for the internet where people can own co-create and profit from the platforms they use and make useful every day order your copy today or go to readright own.com to learn [Music] more Jesus Christ oh my God
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Channel: Morning Brew
Views: 1,347,037
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Keywords: morning brew, morning brew newsletter, morning brew daily, morning brew news, fossil fuels, oil prices, gas prices, crude oil, oil and gas, financial news, energy independence, oil drilling, oil driller, us oil news, us oil trading, us oil trading strategy, energy trading, oil market, oil market news, oil market explained, oil market analysis, oil refinery process, oil refinery, explainer, video essay, business news, energy trading explained, sparkpass
Id: veTbuLu7znc
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Length: 14min 56sec (896 seconds)
Published: Thu Feb 29 2024
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