- The global oil system has been disturbed enough that one of its central elisions is now of material effect to just about everyone in America.
- This describes something more fundamental.
- In a light crude, the chains are short and small, making the oil more like water.
Crude oil, the most significant and widely used commodity on the planet, is strange. Both as a physical thing and as a phenomenon that underpins the global economy, it is strange as reported by The Atlantic.
Domestic gasoline prices
Every day, humanity sticks steel tubes several miles underground and sucks out magic rock juice, which is made of dead ocean bugs.
Each gallon of gasoline comprises 98 metric tons of ancient sea life, compressed by geology and chemistry into a liquid that can propel a 2,000-pound car the distance that a man could walk in a day.
Most of the time, the world doesn’t need to think about the pipelines, tankers, and on-land storage tanks that ferry oil around the world and allow for something like a spot market for it.
Yet Russia’s invasion of Ukraine has brought the system to the fore.
Over the past two weeks, the global oil benchmark has jumped to nearly $130 a barrel, only to fall below $100 today.
Even though the United States imports relatively little Russian oil, domestic gasoline prices have surged.
Petroleum
What we call petroleum is actually more a general category of chemicals than a single substance.
This describes something more fundamental.
Crude oil is a mix of hydrogen and carbon atoms bound together in chains.
In a light crude, the chains are short and small, making the oil more like water.
At the lightest end of this range, you’re left with a hydrocarbon so airy that it’s not liquid at all: the gas methane, just four hydrogen atoms bound to a carbon atom.
Methane is the main hydrocarbon in natural gas.
Oil products
The petroleum products that we use to fuel cars, trucks, and planes also vary in density.
Gasoline has shorter chains than diesel, which, in turn, has shorter chains than bunker fuel, the gunky sludge used to power cargo ships.
That’s what a refinery does: hit longer chains of hydrocarbons with heat and chemicals over and over until they split into something more usable.
In December, the United States imported 405,000 barrels of petroleum and other oil products from Russia.
More than half of these imports were classified as “unfinished oils” by the federal government.
Those Russian fuels are some of the heaviest and most sour crudes in the world.
Financially optimized
That is why, counterintuitively, the United States imports so much of them—and why replacing them is not entirely a matter of matching the volume lost to sanctions.
In the late 2000s, oil and gas companies expected that the United States would soon need to start importing much more oil and gas than it had needed historically.
It would have to process cheap, dirty crudes—such as those drilled from the tar sands of western Canada—in huge volumes in order to satisfy its needs.
Or … that never arrived quite as they had imagined.
Today, many Gulf Coast energy companies feed their refineries a financially optimized mix of sweet, light crudes and heavy, sour crudes, Johnston said.
Importing oil
That’s partly why the United States has begun tiptoeing toward importing oil from Venezuela, which produces a dirty, sour crude much like Russia’s.
The world was once projected to burn 100 million barrels of oil a day in 2022.
The Russian sanctions could also affect the global oil market for years to come.
For now, the cargo on most Russian oil tankers was bought and sold before the war began, Johnston said.
Only then would it consider shutting off production at some wells, Johnston said.
And given the number of Western oil companies that have withdrawn from the country completely, it may lack the know-how and investment needed to turn them back on, even if sanctions eventually do recede, Johnston said.
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Source: The Atlantic
