INDUSTRY
Texas Stands Ready to Lead the US to a Global Crude Oil Supply Solution By: Karr Ingham
40
SHALE MAGAZINE MAR/APR 2022
SASHKIN/STOCK.ADOBE.COM
R
ussia’s attack on Ukraine has roiled energy markets, pU.S.hing crude oil prices upward from already high levels. And no wonder, as RU.S.sia is one of the world’s top producers and exporters of crude oil and petroleum products. RU.S.sia has consistently been the second largest single-country producer of crude oil in recent years, providing over 13% of the world’s crude oil supply. The U.S. leads the way, supplying fully 15% of the world’s crude oil in 2019, 14.8% in 2020, and 14.5% in 2021. Production from Saudi Arabia is a close third, comprising 12-13% of global production. Incredibly, Texas would be fourth on that list, providing over 6% of global crude oil production, outproducing Canada, and all OPEC countries other than Saudi Arabia. Texas produces over 43% of the total United States crude oil, a number that is likely to increase in 2022. And yet more incredibly, the Permian Basin of Texas and New Mexico, were it a country, would be fourth on that list with Texas in fifth place. In early 2022, the Permian Basin is producing nearly 6.5% of the world’s crude oil and comprises 45% of U.S. total crude oil production. Because Russia is a much smaller economy than the U.S., it does not need nearly all the crude oil and petroleum products it produces, and thus. is a major exporter. The potential threat to these production and export volumes because of the action they have taken in Ukraine is what is causing prices to increase this week. On the day of the invasion, crude oil prices spiked upward by over $8 per barrel during the day but then rapidly retreated to preinvasion levels. Crude oil prices are set globally, so any significant shrinking of the global pool of crude oil would naturally cause prices to rise. And that is why West Texas Intermediate crude oil, the U.S. pricing benchmark, has increased by roughly the same amount and percentage as the international Brent pricing benchmark, even though WTI is presently about $3/bbl lower than Brent. The global nature of crude oil pricing is
