In-Depth

U.S. Is Not “Energy Independent,” Despite Trump’s Claims

But Texas’ crude oil production would cushion the effects of potential Iranian attacks on Mideast oil infrastructure.

Iran has vowed revenge on the United States for the assassination of General Qasem Solemani. In the past, Iran has responded to attacks by targeting oil infrastructure and tankers around the Persian Gulf. So, just how vulnerable is Texas, and Houston specifically, to Iranian retaliation?  

When President Trump addressed the nation on the potential for conflict with Iran last Wednesday, he said this: “Over the last three years, under my leadership, our economy is stronger than ever before, and America has achieved energy independence.”

Trump said that has changed America’s strategic priorities. “We are independent,” Trump said, “and we do not need Middle East oil.”

“Well, he’s incorrect,” said economist Edward Hirs, energy fellow at the University of Houston. “We are not energy independent. We consume roughly 20 million barrels of crude oil each day. We only produce about 12.5 million barrels of crude oil each day.”

Hirs said it is true that much of what the U.S. imports now comes from regions more stable than the Middle East.

“Now 4 million from Canada is very significant, Mexico, Brazil,” he said, “but the fact is that oil can be diverted by other countries who need it more.”

Crude oil is a global market. Take China as an example. America’s economic rival now uses roughly 10 million barrels a day more than it produces. It has to import the rest. “And so the Chinese would be bidding for this crude oil,” Hirs said. “And they conceivably could outbid the service station here at Westheimer and Shepherd.”

But what about all that crude oil Texas produces in the Permian Basin and in shale formations? Don’t those make a difference?

“A lot of the oil that we produce in Texas is mismatched with the refining capacity that we have here,” said Jim Krane, the Wallace S. Wilson Fellow for Energy Studies at Rice University’s Baker Institute. “So we ship some of it overseas and we import heavier crude because our refineries on the Gulf Coast are configured for heavy crudes, and that’s basically not what you’ve got in Texas.”

In fact, Texas exports much of that crude oil to refineries overseas that are geared to process it. Many of the refineries on the Texas Gulf Coast wind up processing imported crude. Saudi Aramco, for example, owns the largest refinery in the U.S. – the Motiva refinery at Port Arthur. Much of the 600,000 barrels a day it processes comes from, you guessed it, Saudi Arabia.

“Whether or not the president wants us to be 100% self-sufficient on oil, that’s just really not possible, or at least it’s not likely, I would say,” Krane said.

But Krane said Trump has a point when he says U.S. oil production, particularly Texas production, has given the U.S. a freer hand in foreign policy. That’s again because crude oil is a global market. And right now, that market is flooded.

Say Iran decided to attack the oil infrastructure of America’s allies in the Persian Gulf, as it’s alleged to have done last year in Saudi Arabia. “An attack on oil infrastructure in the Gulf would probably have a short-term effect on the oil price, cause a little bit of pain for drivers wherever they may be, but probably wouldn’t have the long-term effect on prices that Iran might be looking for to really cause pain,” Krane said.

That extra Texas production on the world market means we probably won’t see anything like the spikes we saw in the early 2000s as a result of the Iraq War.

“I suspect that any retaliation that Iran takes that hits at the oil market is probably going to have a slightly beneficial effect to the Houston economy, in that it would drive up oil prices and that upstream oil producers in Texas would get a slight, probably very short-term benefit,” Krane said.

The exception, both Krane and the UH’s Edward Hirs said, would be a direct Iranian attack on U.S. soil. Neither believes Iran is likely to go that far and risk an overwhelming American response.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas Legislature and county and city governments across Greater Houston. Before taking up his current post, Andrew spent five years as Houston Public Media’s business reporter, covering the oil...

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