Positives and negatives of importing oil during coronavirus downturn

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MIDLAND, Texas (Big 2/Fox 24) – The importance of foreign oil has come in to question with the recent downturn of the oil and gas economy. A supply war between Russia and Saudi Arabia caused a significant increase in global supply, while the coronavirus decreased demand rapidly. The effect was a double whammy for the driving force of the Permian Basin economy. On top of that, more and more discounted imports have been coming to U.S. shores.

“Right now the refineries are down maybe 70% of what they were using so they only need 4 million barrels a day, but right now they are probably importing 8 to 10. So that means they are macking out 4 to 6 million barrels a day that are going in to storage… Right now we are importing a whole lot more oil than we are picking up here domestically. Now, I think they are finding out what they have done to the domestic producer”

Kirk Edwards, President of Latigo Petroleum

The ability to frack has led to increases in U.S. domestic oil and gas production, thereby reducing the need for the United States to import oil. In fact, U.S. net imports of oil, after a 30-year steady rise, are declining – but there are experts who think that the Permian Basin has actually benefitted from the international oil market.

“One thing that ahs been so incredibly important has been the removal of the export ban… The market for (domestically produced crude) is an international market. As the export ban was lifted, that really benefitted operators out here because there isn’t as much domestic consumption of that crude.”

Stephen Robertson, Vice President of P.B.P.A

A big reason there is still a reliance on crude imports is that our refineries are not currently built to be able to handle just domestic crude. The U.S. primarily producers a lighter “sweet” crude, and they need heavier crudes to mix with it to create diesel, jet fuel and asphalt.

The U.S. could transition to being able to refine the crude that is produced out here and make that a priority but it would take several years. Anything that will help in the short term has to involve the international market and picture, not just something domestic.

Stephen Robertson, Vice President of P.B.P.A

As people around the world are trying to find solutions for this hemorrhaging industry until OPEC+ production cuts go into effect in May, every day people around the country are losing jobs. Edwards says that the administration has a choice to make – defending crude imports or defending the domestic workforce.

“They have to decide, do they want to protect the American energy worker, or the foreign oil that is coming in. Believe me, I think the 80,000 people and their families that are getting laid off right now will want them to vote for the domestic producer.”

Kirk Edwards, President of Latigo Petroleum

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