Why no nation is truly ‘energy independent’ while the Strait of Hormuz remains closed

Marine traffic leaving the Middle East has again dropped from a trickle to barely a drip. This comes after a decision by the U.S. to blockade Iran’s ports in response to threats by Iran to attack energy exports it hadn’t approved leaving the critical Straight of Hormuz chokepoint.

As Asia struggles with energy shortages that now threaten to spread to Europe, the U.S., meanwhile, remains bountifully supplied with almost record-high crude oil and natural gas production, leading President Donald Trump and others to tout the nation’s “energy independence.” Less than 3% of U.S. oil consumption typically comes from the Middle East—near an all-time low.

So why have gasoline, diesel, and jet fuel prices continued to spike? The U.S. average price for a gallon of regular unleaded gasoline is $4.11 as of April 15, according to AAA. That’s up 50% from a January low of $2.73. California, partially dependent on Asian fuel imports, spiked to $5.88 per gallon. For diesel, the national average is $5.64 a gallon.

“The problem is that oil is a global commodity. We may have plenty of oil—there’s no shortage of U.S. oil—but energy independence is somewhat of a fallacy,” said Jim Wicklund, veteran oil analyst and managing director at the PPHB energy investment firm. “We still have to pay the going world price. It’s a global price.”

The U.S. may be much more “energy secure” than the Arab oil embargoes of the 1970s, but it isn’t independent, Wicklund told Fortune. And the U.S. still imports a little more oil—largely from Canada, Mexico, and Venezuela—than it ships out.

The U.S. doesn’t have nearly enough surplus oil to fill the Middle Eastern void, Wicklund said, and U.S. oil drilling and production has only ticked up slightly since the war began.

There is growing talk of countries “hoarding oil” and restricting exports, said Arjun Murti, energy macro and policy partner at the Veriten research and investment firm. For the U.S., though, a hoarding strategy doesn’t appear that viable.........

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