by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Is the United States really energy independent? Is Iran? As the two nations inch toward confrontation, the complexity of those questions is worth considering.
Iran, like many petro-powers, had long maintained a one-horse economy based on extraction. Oil and petroleum-related products account for almost all of its exports — take those away, and you’re down to fruits and nuts.
Iran has an awesome abundance of oil but for many years did relatively little to develop its refining capacity, without which crude oil is not very useful. …
… While Iran has been expanding its refining capacity, the U.S. oil industry hasn’t exactly been following suit. U.S. refining capacity is up by about 1 million barrels a day over where it was a decade ago — not nothing, but not a real dramatic line on the graph, either. …
… And that creates a potential vulnerability for the United States.
President Trump has a natural affection for the oil business. (That is not what we mean by crude and unrefined, Mr. President!) But in spite of all the chest-thumping you hear from certain politicians about how the country has become “energy independent,” that is not really true. The United States imports billions of barrels of crude a year, about a third of it from OPEC. At the same time, the United States exports a substantial quantity of the stuff. That’s because most of the refineries in the United States were built when the country was still obliged to rely very heavily on imported oil, and so most of them are optimized to handle the “heavy sour” stuff from abroad rather than the “light sweet” stuff from Texas.