Thread by @KnittelMIT

High oil prices suck. I know. With that said I see a lot of misinformation regarding how oil markets work, our production, Russia's production, etc. Perhaps this will help people sort through the noise.

1. The first thing to know about oil is that it is set on a GLOBAL market. What does that mean? That means there is, effectively, one price. So, any supply disruption, anywhere, affects that price and therefore prices in the US.

Even if we produced 2x what we consumed, if there is a war that raises oil prices in EU, the price in the US will rise. So, if someone claims that increasing our production will insulate us from oil P shocks like we are seeing now, they don't know what they are talking abt. Sorry

2. That's not to say increasing domestic production cannot lower prices. It can, point 1 just means that we will never be "oil independent" because when the price of oil increases somewhere in the world, it will increase here. Oil independence is selling a bridge in the desert.

Increasing domestic production can lower the GLOBAL price, but that increase gets spread over the globe and doesn't have as big of an effect on prices as typically thought because it must be measured again GLOBAL supplies.

For example, suppose the US raised production by 1M barrels, that sounds like a lot. It, almost 10% of our production!!! But, sadly, that's only 1% of world production. Would it lower prices? Sure. But not by as much as people often think. We should look to ramp up production.

3. US oil prod is NOT down over the past year!!! Oil production tanked at the beginning of 2020 and has been slowly recovering. Remember the NEGATIVE oil prices in 4/20? This is not about Keystone XL. Not about the #BidenAdministration or any federal policy.

4. Yes, we import oil from Russia. And, we should stop even if only for symbolic reasons. Most of this oil goes to the West and East coasts even though we EXPORT oil out of the Gulf. Why export AND import at the same time?

For one, we have a dumb law called the #JonesAct that makes it more expensive to move something from the Gulf Coast to the East coast than it does to move stuff from Russia to the US! Second, Russian oil is "low quality" oil (like their Dictator)

and our refineries can better handle bad oil compared to others. But, we should still stop importing Russian oil because, despite the claims by the Administration, this can hurt Russia (and certainly not help them).

5. Sick of high oil prices? Drilling is not going to eliminate the risks of high oil prices (see point 1). What will? NOT USING OIL ANYMORE!!! So, when it comes time to adopt policies that reduce our dependency on oil, strongly consider supporting those policies.

They might show up as fuel economy standards, EV mandates, carbon taxes, etc. You want to stick it to Putin, let's get the US and the world off of oil....

#energytwitter #OilPriceHike #Ukraine️ #UkraineRussianWar #UkraineRussiaWar