How much oil does the US buy from Russia? Not much, but gas prices are rising amid Ukraine invasion
Russia doesn’t export much oil to the United States, but it’s just enough that the threat of banning its crude from American shores is driving gas prices and leaving some regions – notably the West Coast – facing the prospect of less crude to process at refineries and making costs even higher at the pump, experts say.
University of Houston Professor Ramanan Krishnamoorti said while Russia is a “smaller player” in the overall crude import market of 3% in the United States, it plays a big role on both coasts. And, shutting down imports to the U.S. would hurt the global economy, said one key oil trade association.
Russia produces “heavier, sour crude,” that U.S. refineries transform into gasoline, diesel and jet fuel, and that type of oil is needed especially along the West Coast and Northeast because of geographic challenges of delivering the refined gas products to those places,” Krishnamoorti said.
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The professor said the U.S. depends on Russia to provide a “balanced portfolio for refineries,” and that has increased in recent years with continued U.S. economic sanctions on another big oil producer, Venezuela, that were imposed during the Obama and Trump administrations.
Krishnamoorti also said the Biden administration could quickly lower gas prices by repealing a 1920 law that requires that all vessels carrying goods between two U.S. points be American-built, -owned, -crewed and -flagged. He said that would allow foreign ships to move American oil, and he said the president and lawmakers could lower gas taxes to help Americans. The law, called the Jones Act, makes it two to three times more expensive to ship oil by sea in the United States, according to the American Fuel & Petrochemical Manufacturers.
The dependence on Russia’s crude has translated into the highest average gas prices in Arizona, California, Oregon, Nevada and Washington, according to AAA.
The national average was $3.65, while California, which has the country’s highest tax on gasoline, had an average price of $4.86 for regular unleaded. Southern states had the lowest average prices, with Arkansas having the lowest at $3.27 a gallon.
Republican elected officials across the U.S. are criticizing President Joe Biden over his energy policies and urging his administration to do more to ramp up domestic production as a way to help wean the nation and its allies off oil from Russia.
While the U.S. and the European Union have so far not added Russian energy exports to the growing list of economic sanctions, The New York Times reported that some oil traders have decided that buying oil from Russia is not worth the trouble even though exporters are offering steep discounts.
Here’s a look at America’s dependence on Russian oil:
How much oil comes from Russia?
In 2021, the U.S. imported an average of 209,000 barrels per day of crude oil, according to the American Fuel & Petrochemical Manufacturers.
While that sounds like a large number, it’s 3% of all imports and just 1% of the total crude oil processed by American refineries, according to the trade association that represents nearly all U.S. U.S. refining and petrochemical manufacturing capacity.
Petroleum refineries in the U.S. produce about 19 to 20 gallons of motor gasoline and 11 to 12 gallons of ultra-low sulfur distillate fuel oil (most of which is sold as diesel fuel and in several states as heating oil) from one 42-gallon barrel of crude oil, according to the U.S. Energy Information Administration.
Krishnamoorti said U.S. refineries are not designed to use 100% of light, sweet crude so that is why imports of heavier crude from Russia are needed.
Who exports the most oil to U.S.?
The United States imported roughly 6.1 million barrels a day last year, which accounted for 40% of the crude processed at American refineries.
The biggest share of imports came from Canada (61%) followed by Mexico (10%)
, Saudi Arabia (6%) and Russia (3%), according to the trade association. Columbia, Iraq and Ecuador follow Russia.
The sanctions imposed upon Venezuela significantly reduced its imports to the U.S. over the past few years.
Derrick Morgan, a senior vice president for the fuel group, said oil and gasoline are globally traded commodities and banning imports from Russia to the U.S. would affect countries across the globe.
“Taking any oil off globally will have an impact,” he said.
Susan Grissom, chief industry analyst for the fuel group, said placing oil sanctions on Russia could affect Kazakhstan, which borders Russia to the north and China to the east, and moves crude through Russia.
Has Russia’s exports increased?
Imports of Russian crude oil into the western U.S. and gulf coasts increased from 2019 to 2021, while imports to the East Coast decreased because of changes in global market conditions and supply patterns, the national trade association found.
Specifically, Russia increased its imports to refineries in California and Washington to offset crude imports from other countries, such as Nigeria.
Who would replace Russia’s oil?
Canada and countries within Latin America could replace Russia’s exports to the U.S., the trade association noted. However, those imports would not be as cost-effective, the group said.
What can Biden do to lower gas prices?
Krishnamoorti said the Biden administration could waive the Jones Act or Merchant Marine Act of 1920, which the professor said would immediately lower gas prices.
The federal law requires water transportation of cargo among U.S. ports only to be conducted by registered American ships with U.S. crews.
Krishnamoorti said if foreign ships were allowed to move oil it would strengthen the supply chain of finished gasoline and especially lower prices on the west coast and northeast.
The law was passed to support commercial activity and serve as a naval auxiliary in times of war or national emergency.
Morgan said Biden could waive the Jones Act, citing a national emergency, and it would significantly reduce the cost and time of transporting oil in the U.S.
“The Jones Act has been around a long time, and it makes it less economical to ship finished gas from Houston to New York than from Europe to New York,” Morgan said
The professor said the president and lawmakers also could cut or suspend gas taxes to help consumers.
Meanwhile, Ohio Sen. Rob Portman, a Republican, said it doesn’t make sense to import Russian oil after the Biden administration shut down the Keystone XL Pipeline as part of its wider efforts to combat climate change and its worsening effects. The pipeline would have transported 800,000 barrels of oil per day from Canada to U.S. refineries along the Gulf Coast.
Morgan said having the ability to access more Canadian crude “would be an incredible advantage and help the industry and consumers.” He added that pipelines are “the most economic way and environmentally friendly way of transporting oil.”
The Associated Press contributed.
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This article originally appeared on USA TODAY: Russia oil: Is the US buying oil from Russia amid Ukraine invasion?