It doesn’t make sense, does it? Domestic oil and gas production is booming, and yet prices are still pretty high. Dr. Tec Patzek, Chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin, said there are many reasons in an article by State Impact Texas.
- The oil reserves that are currently being access with hydraulic fracturing, or fracking, are expensive to get to. American oil reserves tend to lie in shale formations or under the floor of the ocean. Higher production costs become part of higher prices at the pump.
- The natural gas boom has no bearing on the prices of gasoline. Crude oil is the main ingredient in the fuel for vehicles and airplanes.
- Financial institutions: major banks and companies, like J.P. Morgan and Goldman Sachs, finance the development of oil and natural gas, and they also influence the price of the resources, keeping them high.
Where does the oil come from powering American cars? The answers will surprise you.
- The United States
- Saudi Arabia, Mexico, Venezuela, Nigeria, Angola, Russia, and Iraq
Patzek said, “Canada is our main partner in the oil trade, by far. Right now, to say that we rely heavily on Middle Eastern oil is an overstatement.”
Find out more about this article at State Impact Texas.