MINNEAPOLIS (WCCO) — Experts say President Donald Trump’s decision to end the Iran deal could push gas prices beyond $3 per gallon.
That is because the economic sanctions could pinch an already tight global oil supply.
So, where does our gasoline come from?
Gasoline starts as crude oil, which comes from countries all over the world. The crude that ends up in the United States is then refined into gasoline, diesel, jet fuel and more.
U.S. production was equal to 40 percent of consumption 10 years ago, and much of that change is due to hydraulic fracturing, or fracking.
“We’re getting oil from parts of North Dakota, Texas, the Gulf States, that we haven’t been able to before,” said Gabriel Chan, assistant professor at the Humphrey School of Public Affairs.
The U.S. imports and exports crude oil.
“If you’re a U.S. oil producer, you’re going to sell that oil for the best price that you can get, and a lot times those best prices are in markets outside the United States,” Chan said.
Over the past decade, U.S. oil production is up from 8 million barrels per day to 15 million barrels per day. Exports of petroleum have jumped from 1 million barrels per day to 5 million barrels per day, while imports have fallen from 12 million barrels per day to 10 million barrels per day.
The U.S. still depends on other countries for about 20 percent of its consumption. Canada provides the largest share (41 percent), following by Saudi Arabia (10 percent), Mexico (7 percent), Venezuela (7 percent), Iraq (6 percent), Russia (4 percent) and small amounts from other countries.
“It’s true that our oil imports from OPEC have been declining, but actually we’re still just as reliant on them as ever, and that’s because global oil markets are so deeply connected,” Chan said.