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What the Russian oil ban, rising gas prices could mean for U.S.

Posted at 6:15 PM, Mar 08, 2022
and last updated 2022-03-09 07:40:37-05

TULSA, Okla. — If the price of oil is high, we know that means we'll pay more at the pump.

Experts say for every 10 dollar increase in a barrel of crude oil sold, we'll see roughly a 20 cent increase at the pump.

Experts say the U.S. uses around 16 million barrels of oil a day in winter, while we produce around 11 and a half million of that.

So the US ends up importing around four and a half million barrels. Canada supplies about half of what we need. We get the rest from other countries like Russia and Saudi Arabia.

That's why the University of Tulsa energy expert says the ban on Russian oil should not have a big impact on the US.

But he says the prices have been rising in anticipation of the ban and he says they could keep rising if the war continues.

"We got to $90 dollars because the demand has continued to increase over the last few years and production hasn't kept up. But this $110, $120, $130, a lot of that was the market looking and saying, eventually as Putin continues this invasion, someone is going to step up and they're going to say, "that's it, they're going to boycott Russian oil, and the idea being those oil barrel will be taken off the market." says Tom Seng, Director of the School of Energy at University of Tulsa.

"The Ukraine situation creates a threat of taking more barrels off the global marketplace which will make that barrel even more valuable," says Seng.

Seng says the higher prices are partly due to publicly traded oil and gas companies listening to investors and limiting drilling.

"The shareholders have said, "no, not this time." We want to see free cash flow, we want you to pay down debt. We want dividend payments, we want possible buy-back shares, to appreciate the value of the shares we've invested in. And the oil and gas companies have done exactly that. So we aren't seeing the level of activity and expenditure that we would see normally at these price levels," says Seng.

Seng also says the Keystone XL pipeline would benefit America's oil industry if the permit hadn't been revoked.

"Keystone XL would bring an additional 800 thousand barrels a day, of Canadian oil, so yes we need that. This whole situation underscores the fact that yes we need that."

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