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Local professor explains how the oil industry works in the United States

The prices of gas are affected by many things.
Oil Wells
Posted at 10:07 PM, Mar 21, 2022
and last updated 2022-03-22 12:01:13-04

BAKERSFIELD, Calif. (KERO) — Striking more oil in California may not strike gold for consumers. While some local officials argue that ramping up oil production in the state will lower gas prices, an international politics expert said that’s not necessarily the case.

“Making California be able to produce more and lower our prices,” said Congressman Kevin McCarthy.

Local officials like Congressman McCarthy call for energy independence, but Political Science Chair of CSU Bakersfield, Dr. Mark Martinez, said that it may not give us the solution to those high gas prices that we’d hope for.

“Very simple: the vast majority of expenses would be in the extraction process.”

Dr. Martinez is teaching a whole lecture on oil markets and Organization of Petroleum Exporting Countries, or OPEC.

“We can make the argument that the United States could be completely independent, but the problem is that the process is largely inefficient.”

Martinez points to how the west coast is largely cut off from pipelines that Texas and Oklahoma are not.

The prices of gas are affected by many things. Martinez said the two main ones are market structure for oil, where a small batch of producers and sellers share the market, making it less competitive, and the infrastructure of the industry.

The infrastructure includes ports, refineries, and pipelines railways. “Because of the way oil markets are set up, it’s cheaper for us to import than it is to get from the interior of the United States.”

Kern County is the seventh largest producer of oil in the nation and the first in California, but Martinez said we as a nation don’t have the capacity to process light versus heavier crudes.

To produce more oil would mean digging deeper for it and that cost would probably be passed on to the consumer at the pump.

“Now, we could be independent. If you want to pay $12 to $15 a gallon, and even that prices I’m not sure about, but it would definitely be higher. I just don’t see people in the United States being ready to pay that kind of money to be energy independent.”

The costs would be more than Monetary.

“It’s one of the reasons the XL pipeline as canceled, because there’s this great aquifer right under where they wanted to send the pipeline, and all you needed was one big leak at these pipelines, and you’d literally destroy the water source for tens of millions of people.”

Dr. Martinez adds that the prices we’re seeing at the pump are not the worst they’ve been in modern history, the 2008 recession was worse.

He goes on to say it would be beneficial to continue seeking other alternative energy sources in addition to petroleum.