Greg Kozera
This week Shale Crescent USA (SCUSA) attended the 50+ year old Pittsburgh Chemical Day Conference at Heinz Field. We were the closing panel talking about Why Global Economic Factors Now Favor U.S. Based Operations. We discussed energy, supply chains and the most recent SCUSA study which is a direct comparison of manufacturing cost in China vs. Ohio.
On the way back, we stopped for a lunch meeting in Marietta and needed gasoline. Lynnda spotted the cheapest gasoline in Marietta. “Only $ 4.39 per gallon.” She remarked. Two weeks ago, that would have been horrific. Now it’s a bargain. It cost $64.01 to fill up my Subaru Outback. World oil prices today are about $110 per barrel of crude oil. One year ago, world oil prices were around $62 per barrel and I paid about $3 per gallon. The cost was $21 more per tank compared to a year ago. In February 2022 before the Ukraine War, we were paying around $3.60 per gallon of gasoline. World crude oil was selling for around $90 per barrel. In Pennsylvania we saw gasoline prices as high as $4.65 per gallon. (Price information is from U.S. EIA and Oilprice.com)
Paying $21 more per fill up is significant. A number of recent studies and surveys show 64% of Americans are now living paycheck to pay check. If these people use a tank of gasoline a week that’s over $80 a month. Where is the money coming from? What are they giving up? A night out? Buying less or cheaper food? Maybe part of their prescription drugs or the family vacation?
It gets worse for all of us because diesel fuel prices are up over $2.40 per gallon from a year ago. Over the road trucks have lower fuel economy typically 5-9 miles per gallon. These increased transportation costs impact everything we buy from food and clothing to appliances. If we choose to buy products made overseas in places like Asia we will be paying much higher prices. Shipping containers cost over $20,000 per shipment compared to $2,000 a year ago. With these cost increases it is easy to see why we have high inflation. The cost of energy impacts everything we buy.
Oil is a global commodity. Its price is set by buyers all over the world based on supply and demand. “Big oil” has little impact on oil prices. Most U.S. oil and gas wells are drilled by many small and medium sized independent companies. Before the Shale Revolution, when the USA became the world’s leading oil producer, the OPEC nations would meet and attempt to manipulate world oil prices by setting production targets for each member country in an attempt to increase the price of oil.
Americans don’t need to suffer with high energy prices and the inflation they cause. The USA is in the unique position to increase production from its immense oil and natural gas reserves by drilling more wells. In our region much of our gasoline comes from natural gas liquids rather than oil. Unfortunately, government restrictions on the gas and oil industry and the difficulty building infrastructure like pipelines has effectively restricted and discouraged American natural gas and oil production. John Kerry didn’t help lower costs for Americans when he threatened in a Bloomberg interview on April 22nd to shut down the U.S. natural gas industry in 10 years. This gave producers something else to think about before spending $15 million to drill a shale well. The U.S. oil and gas industry has the lowest emissions per unit than any country in the world. We need oil and natural gas as feedstock for products like electric cars, medical equipment, computers and thousands of other products.
The Shale Crescent USA’s message to companies in Pittsburgh on Tuesday was to build or expand here, on top of their feedstock and in the middle of their customers where they can have;
- Secure Energy/Feedstock
- Short secure Supply Lines
- Increased Profitability
- Reduced Emissions
Companies in Europe and Asia are looking for all of these. As expensive as we think things are here, we are very fortunate. Our region has the cheapest natural gas in the USA around $7 per 1,000 cubic feet. In December before the Ukraine war, Europe was paying $35 and Asia $26 per 1,000 cubic feet. A friend of mine just got back from a trip to Spain and paid over $7.50 a gallon for gasoline. Europe’s supply is in question because of 40% of their natural gas and 25% of their oil comes from Russia. They are looking for alternative supplies. That is difficult. Another option is to move their energy intensive manufacturing to the Shale Crescent USA.
In our panel discussion at Pittsburgh, we showed companies the USA has dependable, affordable and secure energy and feedstock. Companies can eliminate expensive ocean transportation and 20,000 miles of emissions by making products here and selling them here. Companies already located here are looking for ways to shorten and regionalize supply chains eliminating the cost and uncertainty of ocean transportation.
It’s time to get serious about inflation and high energy prices hurting all Americans, especially the most vulnerable. High energy prices can drive us into a recession. We have enough natural gas to power the world for decades. We have immense oil reserves. There is a lot of talk about theoretical ways to reduce global emissions but little positive action, especially to help countries like China and India. The USA has the capability to increase energy from natural gas and reduce global emissions at the same time. It’s not theory. We have been doing it for over 10 years. The USA is the only nation meeting Paris emissions targets according to the IEA. It’s time for the American people to tell Washington to get out of the way. We can increase energy production, bring manufacturing back to the USA, lower prices and increase product availability for everyone.
Greg Kozera, [email protected] is the Director of Marketing and Sales for Shale Crescent USA. www.shalecrescentusa.com He is a professional engineer with a Masters in Environmental Engineering and over 40 years’ experience in the energy industry. Greg is a leadership expert, high school soccer coach, professional speaker, author of four books and numerous published articles.
