TULSA, Okla. — There will be some local impacts beyond the price drivers pay at the pump linked to President Joe Biden’s announcement that the U.S. will no longer import Russian oil as part of increased sanctions against Russia for its invasion of Ukraine.
The Russian oil the U.S. was dependent on is between 6%-8% of the total supply Americans use on a daily basis.
University of Tulsa Energy Management Professor Tom Seng said in Oklahoma the amount of oil reserves being stored in Cushing could reach historic lows.
“It’s already close to historic lows, and it could set a record soon as to how low the stock there gets,” Seng said.
Cushing is the largest oil tank storage farm in the world, and it accounts for 13% of the entire U.S.’s energy oil stockpile. The amount of oil in Cushing has been on the decline for months, and it currently is at its lowest level since summer 2018.
Seng said with both government officials and oil companies looking to keep stock going for the American driver, more oil could be withdrawn from Cushing in the coming weeks and months. However, using that oil will not cause prices to go down. It will only lead to a steady supply of fuel that will keep flowing into the market.
FOX23 asked Seng about Oklahoma oil companies making a profit right now and focusing on free cash flow to be used for higher dividends for their shareholders and even gearing up for future stock buybacks. He said at some point, the oil companies are going to have to start drilling because it just won’t look good for them at a time when the world is in crisis.
“There comes a point when the shareholders are going to realize that they too are also the drivers paying a high price at the pump,” he said.
So far, oil companies have no started any new drilling in response to the Ukraine invasion. FOX23 asked Seng how soon new wells could be drilled, and he said there are multiple rigs that are drilled but not operating right now because personnel were laid off when the price of oil tanked in 2020 and it’s not financially feasible right now to operate them and impact the price of oil.
Seng said if the oil companies want to restart the rigs that are already drilled, we could see local oil and gas companies start hiring people again for their operations.
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