Oil

According tothe U.S. Energy Information Administration, the United States is the world’s largest producer of oil. In 2021, the U.S. produced an average of 18.88 million barrels per day. Saudi Arabia is the next largest producer at 10.84 million barrels per day. Russia’s 10.78 million barrels per day makes it the world’s third largest producer. Canada and China round out the top five with 5.54 and 4.99 million barrels respectively.

No one country or group of countries has complete control over oil prices, but the Organization of the Petroleum Exporting Countries (OPEC) does exert outsized influence on global supply. The group attempts to control oil prices by setting production quotas for its 13 member countries, which together account for about 40% of global oil production, 60% of global exports, and 80% of proven oil reserves. Saudi Arabia’s advantage within OPEC comes from its preponderance of spare capacity (i.e., unused but easily accessible reservoirs), which allows it to respond relatively quickly to unexpected changes in supply or demand and volatile market prices.

Texas accounted for nearly half (42.6%) of all U.S. oil production in 2021. The Lone Star state produced 1.7 billion of the approximately 4 billion barrels produced in the U.S. that year. The next largest oil producers were New Mexico (11.2%), North Dakota (9.6%), Alaska (3.9%), and Colorado (3.5%).

Between 2012 and 2020, federal and state taxes accounted for 17% of the cost of gasoline on average. The majority (54%) of gas expenses can be attributed to the cost of crude oil. Refining accounted for about 14% of the cost of a gallon of gasoline, as did distribution and marketing expenses.