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MINNEAPOLIS (WCCO) — Gas prices are climbing as the United States considers a ban on importing Russian oil.
AAA says the nationwide average topped $4.06 Monday. That’s a 45-cent jump in a week — and the highest in nearly 14 years.
Whenever you pay a visit to the pump in Minnesota, there’s a good chance you can thank our neighbor to the north for that fuel. Crude oil from Canada flows through pipelines, stopping at two refineries: one in St. Paul Park, and the other near Rosemount.
The Flint Hills Resources Pine Bend Refinery makes 70% of the state’s gasoline. And 80%-90% of that finished product comes courtesy of Canadian crude.
Canada dominates the list of U.S. imports of oil at 61%. Mexico is a distant second at 10%, Saudi Arabia is third at 6% — and Russia comes in fourth, at 3%.
When measured alongside U.S.-produced oil, Russia only accounts for 1% of the oil consumed in the country. So why is that country’s invasion of Ukraine weighing so heavily on gas prices here? WCCO spoke with Ramanan Krishnamoorti, chief energy officer at the University of Houston.
“It is a global supply-and-demand issue,” Krishnamoorti said. “Prices are essentially reflected off the global nature of oil.”
Russia produces 11% of the world’s oil. The idea of putting sanctions on Russia by Europe and the U.S. would significantly cut the world’s oil supply, spiking prices everywhere.
(credit: CBS)
“Places like California and New Jersey and New York, they’re going to face an added burden on their price,” Krishnamoorti said.
That’s because refineries along the West Coast and Northeast are designed specifically for the crude oil that comes from Russia, not Canada or the Gulf of Mexico.
“Not all crude oil are the same,” Krishnamoorti said.
In California, prices have already shot up well past $5 a gallon, but that only partially impacts Minnesota, Krishnamoorti says. If the U.S. sanctions Russia, it will look elsewhere for oil. CBS News learned Venezuela might once again be a trade partner.
In an effort to offset the rising prices, the U.S. and 30 other countries agreed to release 61 million barrels of oil from their strategic reserves. Half of that will come from the U.S.
Source: CBS Minnesota
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