Photo by Dimitry Anikin on Unsplash
By Samuel Stanton
Oil and energy are two of the largest and most important industries in America, for economic and National Security reasons. Many American jobs even if they do not work directly with oil work downstream of the Oil refineries and will be affected by lower refining capacities and the price will go up for the consumer as well. America also has the most advanced and safest way of refining oil.
What is a Pipeline regarding oil? The U.S. has many pipelines coming in from Canada transporting crude oil to be refined and sent out across the U.S. in the form of diesel, gasoline, or jet fuel. The Keystone XL pipeline was going to create many jobs further Americas energy security, but the new administration decided to shut down the construction of the new section of the pipeline that was going to provide Canadian crude to several refineries in Texas and Oklahoma. This will affect oil and gas prices because one third to one half of gas prices are taxes on fuel, the other part of the cost is supply and demand from the refineries supplying and the consumers demanding. Since the COVID-19 Pandemic began, the demand for oil has been far lower than usual. One of the best things to come out of the COVID-19 Pandemic is the massive reduction of frivolous business travel. For example, a corporation may send a representative to a two hour meeting in San Francisco just to fly right back afterward, but now, the meeting is just held over Zoom or another video chat platform. In doing so, saving the seat on an airplane to fly to San Francisco and back in one day. The reduction in business travel or people traveling for vacation has set refineries to be at a reduced capacity. Jill Langley said, “For refineries to make a profit they have to run at 90% but many are running lower than that and are barley making a profit.” Jill Langley works for EcoLab a company who specialize in the chemistry behind refining crude oil.
Mentioned before one half to one third of gas prices are taxes and fees set in place by the government. Langley said, “The new administration will definitely try to add more tax to fossil fuels and regulate more heavily.” How will that affect you? Gas prices affect everyone and everything from transportation, shipping, air travel, etc. According to Eia.gov, Federal, state, and local government taxes also contribute to the retail price of gasoline. The federal gasoline excise tax is 18.30¢ per gallon and the federal Leaking Underground Storage Tank fee is 0.1¢ per gallon. As of July 1, 2019, total state taxes and fees on gasoline averaged 29.66¢ per gallon. Sales taxes along with taxes applied by local and municipal governments can have a significant impact on the price of gasoline in some locations. 29.66 cents in tax per gallon, the average American buys 656 gallons of gas each year, since there are 228,680,000 then the tax revenue is about $44,494,176,130 and that is just at the pump. There is an incentive in the Federal Government for a fossil fuel industry since they earn so much, it would be surprising to see fossil fuels to disappear in the near future.
Refining oil in America is very important, since America has the highest standards for oil refining and emissions American oil refineries are the cleanest in the world so when we have lots of oil imported to be refined that is not only good for the economy but also better for the environment because foreign countries when refining oil do not have the same exhaust filtration in the refineries or as many precautions when treating the crude. The United States mainly uses Canadian crude oil because it is very easy to treat and work with. The U.S. oil industry is mainly hindered by the government regulation on local oil sourcing because a lot of money could be saved in transportation if oil were sourced more locally.
Many companies are looking for new solutions for energy and oil like ethanol or biofuels. The petroleum company British Petroleum has recently planned to change their name to Beyond Petroleum because they see that there are replacements for petroleum and fossils fuels and want to progress toward that. Langley said, “It’s a very exciting time to be working in the oil industry because of all the new opportunity and direction the industry might take.”
The Keystone pipeline closure was a set back in the American oil industry; however, it was not the only source of oil for Texas refineries, but the shutdown will negatively impact Texas refineries. The extension of the pipeline would have also created a sense of security around the U.S. oil supply and Canada strengthening that relationship. Not only would the pipeline create security, but the oil is good oil according to Langley, “The crude is very sweet crude and is very easy to process. The future of the oil industry is bright with new ideas and solutions, but short term fossil fuels are the only reliable energy source.
