DALLAS — Oil supplies were tight before the Ukraine war. Now they're tighter, forcing the price of Texas oil up 19% in the last month.
In this connected world, the shockwaves of Vladimir Putin's unprovoked invasion of Ukraine, are clearly being felt in Texas, where the oil and gas industry says it's responsible for 22% of the state's gross domestic product.
“Basically, the oil and gas industry has seen a run up in prices. That benefits a big swath of the Texas economy,” said Ray Perryman, a prominent Texas economist.
“With that comes the ability to pay investors more returns and bring more capital into the market. So, it's definitely beneficial for the oil and gas industry in Texas right now,” he said.
So, short term oil profits are up in Texas. But why does a war in Russia spike the price of Texas oil?
Russia is the 3rd largest producer of oil in the world. Though President Joe Biden has sanctioned some oil-related technology, the United States has not sanctioned Russian oil.
Regardless, experts say the Russian oil industry is starting to show signs of stress and some global oil companies, like Exxon, Shell and BP are pulling out of their Russian investments altogether.
That instability is creating more demand for more reliable Texas oil says Dr. Michael Webber, the deputy director of the Energy Institute at the University of Texas.
“Europeans who consume a lot of Russian oil and gas are looking for alternative sources because those purchases are enriching Russia, which then uses that money for weapons systems and attacks on Ukraine,” said.
And how quickly can shipments of American oil and gas start heading toward Europe?
“It takes a while to load up the ships and then to move the energy across the ocean. So, this is a multi-week process, in the end,” he said.
At the pump, the price of gas is also spiking. For example, in the Dallas area, the AAA says a gallon of regular gas costs 25 cents more than it did a month ago. And 95 cents more than a year ago.
To ease price pressures, Biden announced the release of 30 million barrels of oil from the nation's Strategic Petroleum Reserve much of which is located in Texas.
