Lynnda and I returned to Columbus on Sunday from the National Speakers Association Winter Conference in Orlando, Florida. We couldn’t help but notice the increased gasoline prices in Ohio and West Virginia. In Florida we paid $3.59 to fill up the rental. It cost $3.89 per gallon to fill up my car on Sunday. That was a bargain. I paid $4.09 on Tuesday returning from the Marietta Chamber Dinner. The last time I paid that much for gasoline was in 2005 during Hurricane Katrina before the Shale Revolution. During the last two major hurricanes the price of gasoline at my local service station dropped. Gasoline prices have doubled in just two years.

In 2005 we were in the middle of the “energy crisis” and dependent on foreign countries for most of the oil we used. Then I worked in the oil and gas industry. I retired from the industry six years ago. In 2005 I had a company car with paid fuel. Insulating me from most gasoline price increases. Today I’m responsible for my car and fuel. A $2 increase in gasoline prices in the past 2 years is a big deal. I now have a much larger and more diverse network of experts to work with. We collaborate and draw on each other’s expertise and the research we have done at Shale Crescent USA.

This week we were contacted by the media and asked to share our expertise on oil and gasoline prices. Our SCUSA Team has been doing radio, TV and print media interviews. You deserve to have the same information we have been sharing with others around the country.

My local service station gets it’s gasoline from the refinery in Ashland, KY. It’s feed stock comes from Utica and Marcellus wells in the region. It isn’t impacted by hurricanes. In 2005 the oil they refined into gasoline came from the Middle East. When Katrina hit, oil deliveries stopped. Prices at the pump went up fast.

Because of new horizontal drilling technology, the USA has been able to access oil and natural gas from shale reservoirs around the country. Shale is the source rock for conventional reservoirs that have been drilled vertically for over 150 years. It has low porosity and permeability. We didn’t have the technology to produce it until the last 10-15 years. World class wells were created by drilling horizontally, using technology to stay in the reservoir rock and hydraulically fracturing the wells. The USA quickly became the leading oil and natural gas producing country in the world and energy independent. We did it with hundreds of small to medium sized companies not “Big Oil”. The world’s 10 largest oil companies according to GlobalData based on 2021 production are;

1. Saudi Aramco, 10.96 Million bbl./day

2. Rosneft (Russian Energy), 4.22 Million bbl./day

3. Kuwait National Oil Company, 3.41 Million bbl./day

4. National Iranian Oil Company, 3.26 Million bbl./day

5. China National Petroleum Company, 2.98 Million bbl./day

6. ExxonMobil, 2.29 Million bbl./day

7. Petrobras (Brazilian Oil Company), 1.99 Million bbl./day

8. Abu Dhabi National Oil Company, 1.97 Million bbl./day

9. Chevron, 1.83 Million bbl./day

10. Pemex (Mexican Oil Company), 1.81 Million bbl./day

Oil is an international commodity. Its price is set by traders in locations around the world based on supply and demand. Much like grain and other farm markets in the USA. Individual U.S. oil companies, like farmers, have no control over price. Their only decision is whether to sell or not. Local independent service stations can’t control cost from their supplier. They can determine their own sales price but also must compete with numerous similar businesses. In 2005 OPEC and other large foreign national oil companies could influence oil prices by setting individual country production quotas influencing oil supply and price. This is illegal in the USA. But these aren’t U.S. companies.

When the USA became one the world’s top three oil producers, millions of barrels of U.S. oil were added to the world market by hundreds of small to medium sized companies driving world oil prices down. U.S. consumers had $2 gasoline. OPEC lost control of world oil prices. They couldn’t control hundreds of independent U.S. companies.

Why are we paying so much for gasoline now? Post COVID, world oil demand is up. People are traveling again. We went to Disney World when we were in Florida and it was packed. Two years ago, COVID cut demand. The world had a glut of oil. Prices dropped to an all-time low of minus $35 per barrel. Producers paid people to take their oil. Oil prices remained low for months. U.S. producers are slow to invest in new wells. A new administration in Washington with restrictive and uncertain regulations who shut down an oil pipeline that was already under construction has introduced a lot of uncertainty. Companies are reluctant to invest millions of dollars to ramp up drilling and production operations.

Global uncertainty caused by the Ukraine situation is causing oil traders to drive up oil futures prices. They expect higher prices and possibly shortages. Just the announcement of an agreement between the White House and the U.S. oil and gas industry to accelerate new drilling would give traders reason not to bid up oil futures.

The USA can fix the problem. We have possibly the largest oil reserves in the world and the ability to increase oil production increasing world supply and reducing world oil prices. Washington must lead by example. For other countries to increase their oil production we need to set the example and increase ours first. Oil and gas aren’t just transportation fuels they are the feedstock for most of the everyday products we use. (and EVs) It is time to put differences aside and be an American Team. Accelerating drilling and production can reduce global oil and feed stock prices. This helps American consumers, reduces possibility of recession and gives our allies confidence we can supply their needs instead of Russia.