Pumped Up: Pt. 2
March 6, 2026
Alex KiersteinHere's why we can’t drill our way out of a geopolitical conflict. The Iran War has already led to a near-record gas price jump.
Like myself, perhaps you woke up today and digested the news—gas prices hit a near-record one-day increase, the Iran War likely to continue for weeks, the global economic anxiety—and wondered about what happened to American energy independence. Aren’t we pulling more oil than ever out of the Permian Basin in Texas and the Gulf of Mexico America? How are we so sensitive to foreign oil production?
I realized I didn’t know the answer. Perhaps it’s a supply and demand thing; regardless of domestic production, when output elsewhere falls our price will rise. But surely the notion of energy independence means uncoupling the US from those economic principles, theoretically. Ideally. So I turned to the American Fuel & Petrochemical Manufacturer association, a powerful trade group and lobbying outfit that represents basically the entire domestic gas industry. AFPM has no incentive to mince words here.
The answer is twofold. One, the US consumes a lot more than we produce. As of early 2025, we’re roughly 3 million barrels a day shy of our needs. But the second answer is more interesting. The refinery capacity we do have can’t easily process the oil we do make.
The US mainly produces light crude, which is theoretically of higher quality. It’s less viscous at room temperature, and contains more volatile components like naphtha (a major proportion of the hydrocarbons in gasoline). Sounds great, right? But US refineries were constructed to process cheaper heavy crude available internationally. The proportion is generally 60% domestically produced light crude to 40% imported heavy crude, with about 28% of the total feedstock coming from Canada and Mexico.
It’d take billions and billions to convert the refineries to process a higher blend of light crude. And it’d take a lot more domestic production to meet domestic consumption needs.
When the Iran War broke out on Monday, gas prices jumped by $0.12. As Military.com reports, that’s the fourth-highest single-day increase in 20 years. All the other big one-day spikes involved conflicts; two in 2005 were related to the Iraq War, and one in 2022 due to Russia’s invasion of Ukraine.
Despite an increased emphasis on domestic oil production, even supposing it could be temporarily dialed up to meet current demand, our refineries couldn’t process it. American gas prices are coupled to the geopolitical forces that influence international oil prices.
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