Oil, gas, oil, gas. Seems all we like to talk about today is the price of oil and the price of gas. Here in San Antonio, premium gas is hovering around $3.98/gallon and diesel is about $3.89/gallon. Local news websites even post what gas stations have the cheapest gas in town. We’ve become obsessed!
Not surprisingly, this being Texas, oil is a big deal. With refineries on the coast and the headquarters of Valero only a few miles down the road, oil (and gas) are a big part of the Texas economy. And, not surprisingly either, Texas can’t produce enough oil from its wells to meet US demand. So, where does all that oil come from?
Doing the research for this post and crunching the numbers yielded some surprising results. Not only where we get our oil but how much Texas imported even during the “Great Recession.” I have some theories but would definitely welcome your ideas as well.
Texas Oil & Gas Imports by Region
The chart below (you can click on it to make it bigger) shows oil and gas imports (NAICS 211) to Texas from the time period 2008 to 2010 (the time period in which data is available from the International Trade Administration). The data is by the regions as listed by the International Trade Administration and shows the dollar amount of oil and gas imports. As you can see, and as one would suspect, imports by dollar amount seemed pretty high in 2008, plunged in 2009, and then rebound in 2010. All true, but since oil and gas are price volatile just looking at the total price of imports would lead one to believe that the Great Recession did as many would suspect; reduce oil and gas consumption and therefore imports as demand fell. But, this is not really the case.
According to the Illinois Basin Posted Yearly Average Crude Oil Price, prices of a barrel of oil during this time were quite volatile. Remember $4/gallon gas in 2008? Well, during that year the average price of oil was $91.48/barrel. In 2009, prices fell sharply to $53.56/barrel and then rebounded in 2010 to $71.21/barrel. Therefore if you divide the price per barrel into the respective year dollar amount for total oil imports what you find is that the amount of oil Texas imported (as measured in barrels) actually rose from 2008 to 2010. Not what one would expect during the Great Recession. Why is that?
One theory that I have is that during this time period fuel demand by the Department of Defense for the conflicts in Iraq and Afghanistan increased. Evidence for this comes from the DoD Annual Energy Management Report for FY 2008 and 2009. During this time period fuel (gas, diesel, jet fuel) increased from 659 trillion BTUs to 698 trillion BTUs. However, spending for these fuels decreased from $15.7B in 2008 to $9.33B in 2009. The spending decrease because the price of oil and therefore the price of gas and other fuels decreased from 2008 to 2009. But looking at the BTU consumption, one can see that overall consumption increased during this time period. DoD has not yet published a report for FY2010 but, if my theory holds, I would expect to see BTU consumption increase in 2010 over 2009. Any other theories?