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Robert Rapier

Robert Rapier

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An Oil Expert Explains U.S. Energy Independence To TikTok

  • Robert Rapier recently wrote an article about U.S energy independence hitting the highest level in 70 years.
  • The article was shared on TikTok and received a flood of responses and questions, he has now attempted to deal with those questions.
  • Ultimately, the data showing that the U.S. is energy independent cannot be shifted by politics, ad hominems, or a misunderstanding of how gasoline is priced. 

A friend informed me that my previous article on energy independence was mentioned in a TikTok video. As I write this, the video has over 160,000 views and more than 2,000 comments — some of which were a sight to behold. In today’s article, I want to address some of the comments, as well as some email correspondence I received about the article.

Let me first say that many of the comments could be answered by simply reading the article. But let’s dive right in.

I Don’t Believe It

One comment that showed up frequently — usually expressed as simply a profane remark — was pure disbelief.

But, I didn’t pull these numbers from thin air. The Energy Information Administration (EIA) has tracked energy statistics for decades. You can see over 70 years of U.S. energy production and demand numbers here in the Primary Energy Overview table.

The EIA is full of career employees from both major political parties. It tracks those numbers across Republican and Democratic administrations. It would require quite a large conspiracy to game the system on such a scale that you are literally reporting false energy production and demand numbers. Further, it would be impossible to hide that conspiracy from members of the opposing party. Now, sometimes they do come back and revise numbers, but those revisions are rarely significant.

So, whether you believe it or not, the numbers are there for anyone to see. Regardless of how strongly you may hold your beliefs, if facts don’t conform to your beliefs and you don’t adjust those beliefs, that just makes you wrong.

Why Are We Still Importing Oil?

This was explicitly addressed in the previous article. The short answer is that the criteria under which we were declared energy independent under President Trump was that we produced more energy than we consumed. Per that definition, we are still energy independent.

Using the criteria of not importing any energy, we haven’t been energy independent since the 1940s. Under President Trump, we imported millions of barrels a day of oil throughout his term.

Is Coal Included?

Some asked whether coal is part of the calculation. Yes, the categories are fossil fuels, nuclear power, and renewable energy. A look at the table shows how the situation changed over the years.

Relative to 2005, the U.S. consumed about the same amount of energy in 2022. But, fossil fuel production has increased by 48% since 2005. The table doesn’t break the numbers down into individual fossil fuel contributions, but if it did (and you can find that data elsewhere), you would see a huge decline in coal production and huge increases in oil and natural gas production.

But renewables are also included, and there has been a 115% increase in renewable energy production since 2005. The overall consumption for renewables is still only about 13% of our total energy consumption, but it is by far the fastest-growing category of energy consumption (and production) in the U.S.

Why is Gasoline Still Expensive?

Others wondered why they are paying $5.00 a gallon for gasoline if we are energy independent. First of all, the average retail price for gasoline as I write this is $3.60/gallon. (You can see all those numbers here). The average in California is higher, at $4.67/gal. Thus, it’s unlikely you are paying $5.00/gal for gasoline, unless you are in California and maybe using premium.

Let’s address then the spirit of the question, which is “Why aren’t my gasoline prices lower?” The main reason is that supply is only part of the equation. If supply expands, but demand expands faster, then you will pay more even though supply grew.

Energy demand in the U.S. did grow slightly more than supplies over the past two years. But that’s not the biggest factor. Global demand for energy has grown much faster in recent years. Further, OPEC has cut production in order to boost prices.

Not long ago U.S. producers weren’t allowed to export oil, and we didn’t have enough excess natural gas to export that. The situation for both has changed over the past decade. Because U.S. oil and natural gas are now more exposed to global markets, they are being more impacted by global prices.

Weren’t We Paying Under $2.00/gal Under Trump?

In January 2020, before Covid-19 hit the U.S., the average retail gasoline price was $2.58/gal. For context, that price was slightly higher than it was two years earlier ($2.52), and also above the price in January 2015 ($2.21), 2016 ($2.03), or 2017 ($2.38).

When governments shut down schools and businesses in 2020, demand for gasoline collapsed. Oil production dropped sharply in response, but oil prices fell so much, they literally closed in negative territory one day. By May 2020, gasoline prices had dropped below $1.80/gal. So, the reason prices were briefly under $2.00 under President Trump is that Covid-19 crashed the economy. This was not actually a good thing.

By the end of 2020 demand was rapidly coming back, so by January 2021 gasoline prices had climbed back to $2.25/gal. From there, demand kept growing much faster than production could come back online, so we saw sharply rising gasoline prices throughout the second half of 2020 and all of 2021. Making matters worse was a loss of refining capacity during Covid that never came back online. In early 2022, Russia invaded Ukraine and that pushed prices even higher. I have addressed those factors in previous articles (here, for example).

Oil Production Was Higher Under President Trump

Multiple people noted that oil production still isn’t back up to the 13 million barrels per day (bpd) level that we saw during in November 2019. This is correct. Prior to Covid-19 hitting the country in early 2020, U.S. oil production did reach the 13 million bpd level on a monthly basis.

In all likelihood, there would have been another production record set in 2020 if not for Covid. But then Covid caused oil production to crash, and it has been slowly growing back toward pre-Covid levels. We still have a ways to go to reach that previous monthly record, but there is a very good chance that the annual record for oil production will be beaten this year.

We already set new records for natural gas production in 2021 and 2022. That, along with the growth of renewables, are the main reasons we are still producing more energy than we consume.

The Ad Hominem

One person claimed that I am a Biden supporter, and several others made various unsupported claims that my motivations are political.

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This is about the laziest possible argument you can make. First, it’s wrong. I am a registered Independent. I have often been harshly critical of Biden’s energy policies, on matters like the Keystone XL Pipeline and the Strategic Petroleum Reserve. I have criticized him for being hostile to U.S. oil and gas producers, while asking countries like Saudi Arabia and Venezuela to pump more oil.

But, more importantly, this comment doesn’t address the data. Even if I had been a Biden supporter, that doesn’t change the data.

Didn’t Trump Enable This?

Still others tried to credit Trump by suggesting that he put the framework in place to enable energy independence. But as I showed in the previous article, this trend toward energy independence has been in place since 2005.

If you really want to credit someone, then George P. Mitchell, often called the “Father of Fracking,” had more to do with this than any politician.

Nevertheless, if you want to give Trump some credit, here is where you will find it. The trend we had been on toward energy independence would have probably seen the U.S. hitting that level in maybe 2021 or 2022.

Trump did have pro-fossil fuel policies, and there is an inflection point on the graph that moved us faster toward energy independence than the trend of the previous five years. So, you could say that Trump’s policies probably helped us get to the destination faster (in 2019), but there’s little doubt that we were on track to achieve this by the early 2020s.

By Robert Rapier via www.rrapier.com

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