There has been much discussion about the fact that the United States imports Russian oil - and a very good amount of it.
Now, you could be forgiven for asking yourself: "Wait a second, I thought the US had a bunch of oil in the Permian Basin in Texas and the Bakken Shale in North Dakota. Why are we importing oil? Huh?" The answer turns out to be part chemistry and part economics.
When oil refiners talk about crude oil, they usually ask two questions. First: How easy is it to break down hydrocarbons to produce gasoline or jet fuel? (Speak in oil: how light is it?) Second: how much sulfur is in the oil? If not much, it is called sweet crude.
"The higher the sulfur content, the cheaper the more sour crude is actually to buy," said Hugh Daigle, associate professor of petroleum engineering at the University of Texas at Austin.
This is because they take longer to process and require special refining equipment. This cheap, low-quality crude oil comes from Canada, Venezuela and Russia, among other places. In the late 1990s and early 2000s, this was the product American refiners were buying.
Richard Sweeney, an assistant, said, "A lot of refineries, especially in the Gulf Coast, made a very expensive bet to invest in this equipment, which would allow them to save money on input costs by processing, you know, Low quality crude oil," Professor of Economics at Boston College.
Then came the fracking boom. Fracking produces light, sweet crude oil that cannot be refined with that equipment.
"And it's like the economics of that bet, ex-post, to get really bad," Sweeney said.
Even though a lot of that light sweet crude is coming from Texas, which has refineries, the US imports foreign oil to use existing infrastructure.
"They spent billions of dollars on this solvency in the 90s and early 2000s," said Ryan Kellogg, a professor of public policy and deputy dean of academic programs at the University of Chicago. "They don't want to let it sit idle. It's there, and it makes sense to use it."
But there has to be a way for refineries to retrofit their operations to make use of more domestically produced oil, right?
“That is, you know, we can do something. That would require some restructuring of the refineries,” Daigle said. “But does it make economic sense for the refining companies to do this?”
Reconfiguring refineries costs a lot of money, so why do it if companies can still make a profit using their existing platforms?
To be fair, the US refining system is processing more lightly sweetened domestic crude than ever before, but nowhere near the point where the country can stop importing heavy, sour oil from overseas.
The result: Since 2020, the US has been a net exporter of oil, sending much of its lightly sweetened crude to Europe and Asia, where refineries are equipped to deal with oil from West Texas and North Dakota.