The US is the World's Biggest Producer of Oil: Why Are Gas Prices in OC Still So High?

Categories: Environment

Gas.jpg
Brandon Ferguson
Gas Stations from La Habra, Brea, Anaheim, Irvine
Late last year, National Public Radio (NPR) reported that the United States may have finally achieved energy independence. Based on data culled from the Energy Information Administration (EIA), 2013 was the year that the US became the world's biggest producer of oil and natural gas. The hallowed radio news organization interviewed former Reagan underling J. Robin West, who likened the watershed moment to the toppling of the Berlin wall.

But something is missing from the party here, especially here in Orange County: low gas prices.

A quick look around the stations between La Habra and Irvine shows prices hovering at $3.75 for 89 octane, which begs the question: whatever happened to the laws of supply and demand?


Experts say that increases in the use of technology such as fracking and horizontal drilling in the oil fields of North Dakota have led to some relief at the pump--but those same experts add that California is a market unto itself.

"California refineries don't have the same access to this new oil as the rest of the country," Mason Hamilton, an EIA markets analyst told the Weekly. "You don't have pipelines bringing gasoline into California from other parts of the US."

While logistics certainly play into California's gas problem, Richard Heinberg, a senior fellow at the non-profit think tank Post Carbon Institute, argues that there's something more basic than logistics to consider.

"Oil is never going to become more affordable because we've gotten the cheap easy stuff already," Heinberg told the Weekly. "[Now] it's all from tar sands or it's from light, tight oil in North Dakota or south Texas, which requires fracturing or horizontal drilling, which is expensive."

Fracking, as it turns out, is both expensive and costly--at the moment, most of the country is locked in a deep freeze and California is experiencing its driest year on record. Respected scientists and other groups such as the California Department of Water Resources say the freak weather is due, at least in part, to man's rampant use of oil and petroleum products.

Heinberg argues that as oil becomes more expensive to harvest and the consequences of their use becomes more apparent, the country should be looking at alternative options.

"Where's our plan B? We should be figuring that into our national strategy for five to 10 years from now when it's even harder to get the stuff out of the ground."

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19 comments
Jay Arugas
Jay Arugas

OC represents the epitimy of what's wrong with this country-narcissistic ambivalence in the face of, greed and shamefully injustice piled high.

Karl Irish
Karl Irish

any local oil just gets added to global supply and will go where demand can fetch the highest price.

Bill Martin
Bill Martin

because as we should know by now the oil companys are fucking us big time

Andre Miller
Andre Miller

89 cents per gallon pet gallon doesn't help either

Mike MacDuffee
Mike MacDuffee

I live in HB and there is still OIL here and we pay a shitload

Mr2Much
Mr2Much

Thank you for this hard-hitting investigatorial news story (insert sarcasm font if some genius finally invents one). I am amazed at the resourcefulness you displayed in flipping this into 'oil is evil because it causes climate change' piece once you discovered that there was no Big Oil boogeyman behind California's high gas prices. But you are FLAT WRONG by implying that this new ~$3.50 baseline is the norm for fracking produced gasoline. Much of the rest of the country pays ~$1.00 less then California. We pay more because like idiots we have managed to isolate ourselves from the rest of the country (no pipelines in my backyard). There is no supply-and-demand at work in the State that decided to mandate pouring rocks in her own harbor and remove herself from market mechanisms by mandating special fuels. You reap what you sow

So stop being partisan long enough to be honest.

paullucas714
paullucas714 topcommenter

The only reason prices are so high is because the gasoline that is being refined is being shipped to countries like Japan who pay a higher amount for gasoline than we do.

Mr2Much
Mr2Much

Capitalism is not at work in the oil/gas business in California. It is a heavily regulated State imposed system that at least allows the extractors to recover their higher burden costs from the consumers. Otherwise we would be like Mexico and Venezuela and watch the gas just stop flowing completely.

Mr2Much
Mr2Much

Special gas blend, limited refinery capacity, high fuel taxes, heavy regulatory burden, declining old field production, limited to zero exploration, closed market. Yeah! You are going to pay more. Besides, living close to the crude does not mean what goes into your tank comes from near you. Different grades play a role also. You are in a closed market operated as a near monopoly BY STATE DESIGN! That will cost you every time. But to reiterate, fracking has nothing to do with it. The extraction process has not been allowed in this State and we import next to nothing from the rest of the country.

brandonf76
brandonf76

@Mr2Much Fracking has been going on in California for years genius. We just don't know to what extent.

Mr2Much
Mr2Much

Clarification: We import next to nothing in the form of gasoline.  We import a lot of crude oil by rail and tanker.

Mr2Much
Mr2Much

@brandonf76 This is traditional fracking techniques being done in Long Beach.  Each well is probably using between 1,000 - 2,500 gallons each.  To be classified as 'Massive', it needs to use a MINIMUM of 330,000 gallons.  Many Massive Fracturing wells average well over 1 million gallons of injected fluid EACH WELL!  This scale of fracking is what is going on back East.  It is really not a fair comparison and if it were not for the publicity of the projects in the rest of the US the public would never have raised an eyebrow about what is going on here.

Mr2Much
Mr2Much

@brandonf76 "Hydraulic Fracking" is a very broad term.  Technically, any well that has a liquid injected to crack open the medium the petroleum is locked in is fracking.  It has existed for years and was never noticed much until the recent perfection of 'Massive Hydraulic Fracturing', especially in combination with horizontal drilling.  This technique is primarily used to release "tight oil and gas" deposits, often in shale beds.  Not much of this has been done in California that I am aware of.  It has been pushed for in the Monterrey Shale bed where it could be effective.  A couple of hundred traditional' fracking wells were being done in California a year for petroleum, mostly offshore.  Probably triple that in gas wells where it is usually more cost effective.  This has gone on since at least the 1980's.  But this should not be confused with the Massive Hydraulic Fracturing that most people think of when they think of fracking.  That is the process that has created the US renaissance in petroleum production and to which I refer when I say California is not producing oil using fracking.  Truthfully, I would be more concerned with hydrofluoric acid injection to melt the rock then the traditional hydraulic fracking technique.  That has been done much longer and more frequently in California then fracking has ever been.

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