10 years to replace Russian energy supply: Ex-Texas oil regulator
6 Min Read
The sanctions campaign against Russia has harshly affected the energy supply globally, and it could take 5 to 10 years to replace the lost energy supply.
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It could take 5 to 10 years to replace the lost energy supply.
Former Texas industry regulator Ryan Sitton said the world community would require five to 10 years to match Russia's daily production of millions of barrels of oil, according to Sputnik.
On Tuesday, President Joe Biden issued a US-only ban on Russian oil imports, further isolating a country that provides 10% of global supply on its own. According to the Energy Information Administration (EIA), Russian oil made just a small percentage of US imports last year, but the change sent crude and gas prices soaring to new highs.
"How long before the rest of the world can make the ten million barrels of oil that Russia produces? The answer is it is so far off it can't be done," Sitton, a former member of the Texas Railroad Commission, the oil regulator in the United States' top oil-producing state, said. "We're talking five, ten years away before that would even be possible to replace all ten million barrels."
The United States, Europe, and China are the world's largest oil purchasers, according to Sitton, who added that China may now be Russia's only viable alternative.
"China is in a really good position because China now as Russia's sole customer can almost command whatever prices they want to pay for that oil because there are no other buyers," Sitton said.
Will the US depend on Iran, Venezuela?
The United States is allegedly aiming to lift sanctions on Venezuelan and Iranian oil, aiming to identify an alternative supply to Russian energy.
"It's funny isn't it because we have had sanctions in place against Iranian and Venezuelan oil and you sanction the Russian oil and you're almost out of options," Sitton said.
Russia generates a lot of heavy and intermediate oils, which are needed to run US refineries, according to Sitton.
Light sweet crude oil produced in Texas is difficult to use in all of the United States' refining infrastructures, he noted, Venezuelan crude oil would be a suitable replacement for Russian crude oil.
The activities of the West against Russia, as well as the situation in Ukraine, will push countries to reconsider their energy strategies, according to Sitton.
In response to Russia's special military operation in Ukraine, the US and its allies have placed broad sanctions on the country. The sanctions have delayed, but not eliminated, Russian oil and gas exporters' ability to transact deals that involve global financial networks, particularly US dollars.
US average gas price may hit $6 per gallon
Former Texas industry regulator Ryan Sitton told Sputnik that the US embargo on Russian oil imports might result in American consumers paying close to the national average price of $6.00 per gallon for regular gasoline.
Regarding the crisis in Ukraine, the Biden administration prohibited Russian oil imports this week, while the UK promised to phase out Russian oil imports by the end of the year. In the meantime, the US House of Representatives enacted legislation prohibiting the import of Russian energy products, which the Senate is set to consider on Thursday.
"It's very disruptive so it would not surprise me at all if average gasoline prices in the United States go over five dollars a gallon and maybe even start approaching six," Sitton, a former member of the Texas Railroad Commission, the oil regulator stated.
Gas hits a new record high
The average US price of regular gasoline hit two consecutive records on Tuesday and Wednesday, according to the American Automotive Association (AAA). The price of gasoline increased by eight cents overnight in the United States, from $4.17 to $4.25 after the US government announced a ban on Russian energy imports a day before.
Sitton projects that other European nations might also ban the use of Russian energy because of its close proximity to the conflict in Ukraine. However, Sitton emphasized that the real problem is where the oil is being distributed, not if there is enough.
It may take months for energy supply chains to balance out following the US ban on Russian oil imports, Sitton stated.
In addition, it could take the United States three to six months just to produce an extra one million barrels of oil. The increase in the US production of oil, by three to four million barrels, could take a year or two to achieve with 100% government support to ensure plenty of financing and stability in terms of supply chains.
Russia provides 10% of the world's crude oil needs and 40% of Europe's gas requirements. However, the US buys a limited amount of crude and petroleum products from Russia compared to Europe.
The United States and its allies have imposed comprehensive sanctions against Russia in response to its special military operation in Ukraine. The sanctions have halted the ability of Russia to export its oil and gas to transact deals that require world financial networks and US dollars.
W. House optimism on producing more oil means nothing
What the White House Spokesperson Jen Psaki stated about the United States being in a good position to increase energy production is meaningless unless the Biden administration reneges on its climate-related rhetoric, former Texas industry regulator Ryan Sitton told Sputnik.
"Frankly, her words mean nothing. It's going to take some concerted effort on the part of politicians," Sitton said.
To offer financial markets confidence to invest in companies that would allow them to engage in new energy ventures, Sitton said Democrats would need to shift their posture of seeking oil from producers all over the world and adopt a pro-US oil and gas position.
Psaki stated earlier this week that US energy production is increasing and approaching record levels, projecting that the US will produce more oil than it has ever produced in 2023. She said that US energy producers had plenty of cash on hand and that the industry has over 9,000 granted drilling permits that have yet to be used.
However, Sitton pointed out that making such comments is simple, but they have little weight behind them.
