More Than 200 Attend 1st Annual Illinois Basin Celebration

More than 200 Illinois Basin oil exploration and production industry professionals attended the first annual Illinois Basin Celebration at the White County Fairgrounds’ Floral Hall in Carmi on Wednesday, Sept. 7.

The event was organized by the Illinois Petroleum Resources Board (IPRB) to recognize the efforts of the more than 4,000 Illinois Basin oil exploration and production industry professionals and featured a complimentary lunch and presentation by guest speaker Warren Martin of Kansas Strong. Free “Illinois Basin Proud” hats, T-shirts and bumper stickers were also handed out to attendees.

Martin’s presentation focused on the so-called “energy transition,” the essential need for petroleum now and in the future, and the importance of industry advocacy by those who work in the oil and gas industry.

The event also included an IPRB Petro Pros presentation to a group of Gallatin County High School seniors by industry volunteers Mike Payne of Shawnee Oil Company, Ross Basnett of Campbell Energy, Travis Thompson of Travis Thompson Oil Corp. and IPRB executive director Seth Whitehead. Campbell Energy, Franklin Well Services and Jacam Catalyst also displayed various oilfield equipment for the Petro Pros volunteers to show the students.

Local companies provided oil exploration and production industry career information for attendees and the general public. There is currently high demand for almost all of the 75-plus oil exploration and production industry careers, with particularly high demand for truck drivers, electricians, plumbers, welders, roustabouts and various rig and well servicing crew members.

Most of the 200-plus attendees were able to stick around after lunch to pose for the above group photo. Illinois State Sen. Terri Bryant (R-58th District) and State Rep. Dave Severin (R-117th District) were also in attendance for the event and group photo.

Between 10-12 million barrels of oil is produced annually in the Illinois Basin, which includes southern Illinois, southwestern Indiana and western Kentucky.

Illinois oil production alone makes a $3 billion annual economic impact, generating $770 million in yearly personal and business income and $700 million in state and federal tax revenue. More than 30,000 Illinoisans receive royalty income from Illinois oil production, and active Illinois oil leases have generated an average of $7.46 million in local property tax revenue per year since 2007. More than half of that revenue has gone to fund schools near production.

The second annual Illinois Basin Celebration will be held next year in Carmi at the Floral Hall at a yet-to-be-determined date.

The Three Biggest Myths of the ‘Energy Transition’ Narrative

Since passage of the $369 billion climate bill , those who believe we can rely entirely “green” energy have doubled down on claims that these technologies will lower energy costs, make the United States energy independent and eliminate the need for oil altogether. These are the three biggest myths of the “energy transition” narrative.

First and foremost, even the Biden administration’s Department of Energy acknowledges we will need a lot of oil for decades to come.

Why? Because wind and solar replace oil like hats replace shoes. Wind and solar can only generate electricity and provide no alternative to the more than 6,000 modern products made with petroleum, including 70 percent of the typical electric vehicle. Petroleum will also remain essential to the transportation sector far longer than “Keep It In the Ground” activists would like to admit. Not only are electric passenger vehicles far too expensive for most Americans, replacing a fleet of predominantly diesel-fueled trucks that transport more than 70 percent of the goods used in this country would be a monumental task. The same can be said for electrifying the aviation, rail, excavation and maritime sectors. The continued need for oil is one reason why carbon capture – including enhanced oil recovery using carbon dioxide sequestration in oil-producing formations – is such a major component of the climate bill.

Wind and solar also make electricity more expensive for consumers, plain and simple.

When you hear renewable energy proponents claim wind and solar are cheaper than traditional energy, keep in mind they are referring to the cost at the electricity generation source. But what really matters is the cost of electricity to consumers – and wind and solar drive up consumer energy costs because they require nearly 100 percent expensive and redundant backup power from hydrocarbon generation sources or batteries to be reliable. Widespread adoption of electric vehicles will only exacerbate this issue, driving up power demand on a grid that is already overwhelmed.

This explains why electricity costs in “green” Germany have more than doubled since 2000 and were nearly three times higher than the U.S. even before the European energy crisis sent costs into the stratosphere.

Reuters recently reported Germany’s renewable energy mandate “has left Germany with Europe’s highest retail electricity prices and at risk of grid blackouts.” And despite trying to “go green” for 20 years, renewables are able to meet just 15 percent of Germany’s primary energy needs.

Which brings us to the issues of energy independence. Because of the limitations of intermittent wind and solar energy and its refusal to develop its own hydrocarbon resources, the “greenest” country on Earth is the opposite of energy independent. Germany has long been dangerously reliant on Russian oil and natural gas. And in absence of the Russian natural gas since Vladimir Putin invaded Ukraine, Germany has even un-shuttered coal and oil-burning power plants in order to keep the lights on.

And here in the U.S., although sunshine and breezes can obviously be domestically sourced much like our bountiful traditional energy resources, the raw materials for components that collect the energy generated by the sun and wind are currently coming from foreign nations – mostly China. The U.S. has the potential to change the latter, but the same environmental groups that support a rapid energy transition ironically vehemently oppose the domestic mining needed to make it possible. Why? As the New York Times recently reported, “Electric cars and renewable energy may not be as green as they appear. Production of raw materials like lithium, cobalt and nickel that are essential to these technologies are often ruinous to land, water, wildlife and people.”

To be clear, we need all forms of energy, including the alternative variety. But with the various limitations and bottlenecks of wind, solar and electric vehicles noted, it is misleading for “green” energy proponents to insist that we not only won’t need oil and natural gas anymore, but that alternative energy will be cheaper and make us energy independent. Those who have bought into this false narrative will find out soon how misleading it really is.

5 Technologies That Can Dramatically Reduce Environmental Impacts Oil & Gas

Non-political entities such as the U.S. Energy Information Administration (EIA) have repeatedly confirmed the fact that we will be using a lot of oil and natural gas for many decades to come. In fact, the most recent EIA projections show oil and gas consumption in the United States will actually increase in the coming years rather than decline rapidly.

So, with the reality that we will need a lot of oil and gas for at least the next 30 years in mind, the real question is how can we minimize the environmental impact from hydrocarbon use. ­Fortunately, a number of technologies have been developed - or are being developed - that will allow us to reduce emissions and protect the environment while continuing to use hydrocarbons to meet our energy and modern product needs. Here are five of the most promising technologies.

Enhanced Oil Recovery with CO2

Enhanced oil recovery (EOR) using carbon capture and storage (CCS) is a rapidly-improving method of reducing carbon dioxide emissions while also increasing petroleum production. It also has rare strong bipartisan support, increasing the odds of its mass adoption in the coming years. Here’s how EOR with CO2 works.

Carbon capture and storage (CCS) is the direct capture of carbon dioxide from power plants, industrial facilities and the atmosphere.

EOR is a CCS method that involves taking captured carbon dioxide emissions and storing them permanently in underground oil reservoirs, subsequently increasing oil production by pressurizing the formation and “pushing” oil into the wellbore, as illustrated in the following graphic.

Graphic provided by Illinois State Geological Survey.

EOR using CO2 is currently responsible for 450,00 barrels of oil production per day in the United States and holds the potential to revive mature oil fields such as those most prominent in the Illinois Basin. CCS has also been identified by the United Nations Intergovernmental Panel on Climate Change (IPCC) as being pivotal to reducing emissions and avoiding the worst impacts of climate change. Even the Natural Resources Defense Council (NRDC) has called CO2-EOR a win-win-win for our environment, energy and economy.

Fortunately, a new peer-reviewed study finds there is enough potential underground CO2 storage to meet Paris climate agreement targets. So, if costs continue to fall, EOR with CO2 should be a viable tool to reduce CO2 emissions in the decades ahead.

E&E News also recently reported that a recent Supreme Court ruling will elevate EOR with CO2 as a favored emissions reduction technology. From the E&E News story:

“The Supreme Court’s recent climate ruling means carbon capture will likely form the backbone of any new EPA regulations targeting carbon dioxide emissions from power plants, energy experts and legal analysts said.”

CCS With Electro-swing CO2 Adsorption

A new CCS technology known as electroswing adsorption holds promise to reduce transportation emissions even as use of traditional ICE vehicles continues over the next few decades.

Researchers from the Massachusetts Institute of Technology (MIT) recently published a study detailing how the technology could use a battery-like device to suck CO2 directly from small and mobile emission sources and store it at a relatively low price ($50-$100 per ton of CO2).

Click to view MIT video illustration (MIT graphic).

The technology could be applied to automobiles and planes, and could also possibly be used for EOR, proving not only to be a key tool in addressing climate change but producing the oil the world will need for decades to come.

Widespread implementation of electro-swing technology would dramatically reduce the environmental footprint of continued widespread use of ICE vehicles. The EIA projects internal combustion engine (ICE) vehicle use won’t peak until 2038 and that there will actually be more ICE vehicles on the road in 2050 than there are now.

US Energy Information Administration graphic.

Waterless Hydraulic Fracturing Alternative

Multi-stage high volume hydraulic fracturing (HVHF) of horizontal oil and natural gas wells has elevated the United States to the status of being the world’s leading oil and gas producer. But it also uses a lot of water, which is problematic in arid oil and gas producing states such as Texas and New Mexico.

Fortunately, a promising technology known as Plasma Pulse Technology (PPT) shows potential of being a less water-intensive and cheaper alternative to both HVHF and conventional hydraulic fracturing of vertical wells.

PPT produces a high-pressure plasma pulse in the target pay zone via a powerful electrical discharge. A compression shock wave then propagates along the path of least resistance over long distances.

Propell Technology Group, Inc., image.

In a well that has previously been hydraulically fractured, the first two or three pulses clean existing perforation. The subsequent pulses then penetrate into the reservoir and create new micro-cracks that allow oil and gas to flow more readily into the wellbore.

Forbes recently reported that PPT is 75 percent cheaper to conduct on the traditional vertical wells most prominent in the Illinois Basin than conventional hydraulic fracturing. It looks to be ideal for re-fracturing existing wells but could replace hydraulic fracturing altogether in the coming years.

Using Associated Natural Gas to Fuel Cryptocurrency Mining

The capturing of associated natural gas produced along with oil at production sites and using that gas to fuel cryptocurrency mining is already proving to be an effective means to reduce flaring.

Not only does this practice reduce energy waste and emissions from flaring, it also reduces the carbon footprint of the highly energy-intensive process of cryptocurrency “mining” – which is actually a process of engineers and computers running complex math problems to access cryptocurrency at data centers.

The associated natural gas that would otherwise be flared due to the lack of gathering infrastructure at remote oil production sites is instead a captured to produce electricity for the “mining” process at data-centers located near the production sites.

Arab News image.

Lithium Extraction from Produced Water

The push to electrify everything with electric vehicles and renewable energy technologies such as wind and solar is expected to increase global lithium demand up to 2,000 percent. The mineral is necessary to produce batteries for these technologies and the United States currently accounts for less than one percent of the world’s lithium due to vehement environmental group opposition to domestic mining.

However, co-produced brine from oil and gas production contains lithium and it could potentially be extracted from this otherwise useless byproduct of oil and gas production.

Natural Gas Intelligence reports, “Recovering commercial volumes of lithium from the oil and gas byproduct would bolster the United States’ domestic supply of the valuable mineral, but it won’t be easy.”

The University of Louisiana-Lafayette’s Daniel Gang, director of the Center for Environmental Engineering and Protection adds: “Mining lithium requires a highly selective recovery technology, extracting just the lithium from produced water. The technology is still in the benchtop-laboratory or pilot scale.”

Mining Magazine image.

Though challenging, figuring out a way to extract lithium from produced water would prove more ideal than relying on China for the metal. China has a near global monopoly on mining of cobalt, lithium and rare earth elements that are essential to producing the solar panels, wind turbines and batteries needed to capture energy generated by the sun and wind. China also controls more than 50 percent of world’s lithium processing.

Just as importantly, the technology could reduce the need for unprecedented and carbon-intensive mining – a win-win for the environment and our energy security.


It is often assumed that continued hydrocarbon use is synonymous with increased greenhouse gas emissions and other environmental impacts. But the fact remains that we will need to use oil and natural gas for many years to come, and fortunately a number of technologies are being developed that can allow us to protect the environment while using the traditional energy sources we need.

Energy Security Only Possible With an All-of-the-Above Approach

One of the more ludicrous claims to gain traction since Russia’s invasion of Ukraine fast-forwarded an already inevitable energy crisis is that simply going “green” can secure our energy independence. This is an ironically-flawed notion that ignores some inconvenient truths our European allies know all too well.

Though we obviously don’t rely on foreign nations for sunlight and wind, we are almost completely reliant on other countries (mostly China) for the immense quantities of minerals and materials needed to build the wind turbines, solar panels and batteries used to collect “green” energy. This is primarily because the same “Keep It In the Ground” groups that insist we go 100 percent “green” have proven very effective at stopping the domestic mining needed to access these raw inputs here in the United States. Add in the fact renewable energy can only generate electricity – weather-dependent and unreliable electricity at that – and it’s clear wind and solar replace oil and thousands of petroleum-based products about as well as hats replace shoes.

It is with these facts in mind that the Department of Energy has repeatedly forecast we’ll need more oil and natural gas 30 years from now than we’re using today.

That said, the only realistic path toward energy and economic security is an all-of-the-above approach that focuses on producing as much of all forms of energy in the United States as possible.

Fortunately, we are in a much better position to truly embrace an all-of-the-above approach than our friends in Europe. Europe has spent the past 20 years shunning development of its hydrocarbon resources and attempting to go “green.”

So how’s it going?

Because of its obsession with going “green,” a vast majority of European countries banned hydraulic fracturing (aka “fracking), the most effective technology available to maximize oil and gas production. “Fracking” has single-handedly transformed the United States into a net petroleum exporter over the past 15 years and it is now used to complete 95 percent of new oil and gas wells in the U.S. At the same time, European oil and gas development has declined rapidly while renewable energy has proven woefully inadequate for meeting Europe’s energy demand. As a result, the continent has relied on Russia for 40 percent of the natural gas and 25 percent of the oil it consumes.

After bankrolling Vladimir Putin’s atrocities in Ukraine to the tune of $450 million per day in Russian oil imports as it dilly-dallied for months on a decision to ban Russian petroleum, Europe is now scrambling to find a replacement for the oil it desperately needs. Its leaders’ proposed solution: more renewables. As one industry insider recently tweeted, Europe has painted itself in a corner and is contemplating using more paint.

We must learn from Europe’s mistakes and avoid their unrealistic “green” energy fantasies that have turned into an energy nightmare. There are no shortage of red flags on the misguided path to relying on foreign nations for alternative energy.

Stellantis CEO Carlos Tavares recently warned that the electric vehicle (EV) industry is facing a “Darwinian period” due to difficulty in acquiring essential mineral inputs for massive EV batteries. Environmental groups also recently successfully lobbied the Biden administration to give China a two-year pass on solar component tariffs. Why? Because they know U.S. manufacturers don’t have the supply chains needed to fill a void that a sudden halt in Chinese imports would create.

President Bien has invoked the Defense Production Act in an effort to increase the domestic supply of minerals. But his own Department of the Interior recently killed a major nickel and copper mine in Minnesota after being pressured by environmental groups. In a comment widely trumpeted by “green” groups for years, Earthjustice senior legislative representative Blaine Miller-McFeeley said, “We do not need more dirty mining to achieve the clean energy transition.”

But in reality, all forms of energy and modern products originate from the ground and we will need more mining, drilling and other forms of energy development to meet our ever-growing needs. That is why an all-of-the-above energy approach focused on domestically-produced oil, natural gas and alternative energy is the only realistic way of ensuring our energy security and any hopes of energy independence. Simply going “green” won’t cut it.

What to Know About New EDF Marginal Well Methane Study

The Environmental Defense Fund (EDF), an environmental group that has long lobbied for federal regulations on methane emissions from marginal oil and gas wells, released a study last week that claims low-producing wells are responsible for roughly half of the fugitive methane emissions from U.S. oil and gas production sites.

The study’s topline finding contradicts the Obama administration’s 2015 statement that methane emissions from marginal wells are “inherently low” and a draft Department of Energy (DOE) study that supports that conclusion.

Nonetheless, the new EDF study received widespread media coverage while the DOE study has received virtually no attention.

Why? Mainly because the final version of the Department of Energy study, originally slated to be released in late 2021, has been stalled in the peer-review process since last December. In the meantime, the Biden administration has released its new methane rules, the draft version of which largely exempts marginal wells. However, the public commenting period is ongoing and - not surprisingly - EDF has released a peer-reviewed report of its own. The group expects the Biden administration’s Environmental Protection Agency to utilize the study in finalizing its new methane rules. As S&P Global Platts reported:

“On a call with reporters to discuss their new study, EDF scientists said the agency [EPA] has indicated it may expand inspection mandates to such [marginal] wells in a supplemental rulemaking this summer.”

The contrasts between what the EDF study asserts and what the preliminary DOE study found are not subtle.

The new EDF study, which is based on measurements from six of EDF’s previous studies on oil and gas production site methane emissions covering at total of 240 marginal producing sites, claims methane leakage rates from marginal wells exceed 10 percent of overall production. The new EDF study states:

“Most low production well sites (75%) have detectable site-level CH4 emissions of up to 5kg CH4/h (Fig. 3).”

The six studies utilized for the new EDF study also used downwind, site-level measurements that did not allow for methane emission source attribution and did not involve any operator participation. The latter goes against Academy of Sciences recommendations. The new EDF study states:

“We focus on site-level measurement studies, performed using ground-based downwind measurement approaches that do not require operator-provided access to measured sites and can resolve total CH4 emissions at each measured site, but generally do not resolve source-specific emissions (Methods).”

Unlike the EDF studies, the DOE study was conducted, with only one exception, directly on oil and gas production sites. The study was also conducted with the full cooperation of operators, using random sampling to select sites, while also giving no more than 24-hour notice to operators that measurements were being taken. The following photographs and captions are included in the draft DOE report.

And, unlike the new EDF report, the draft DOE report includes measurements from several Illinois Basin oil production sites. Notably, Illinois Basin oil wells produce very little associated natural gas.

Among the most notable takeaways from DOE study field campaign that included the Illinois Basin were:

  • 75 percent of the 87 oil sites evaluated had no detected emissions at all
  • 90 percent of observed emissions were less than 13 standard cubic feet per hour
  • 95 percent of the observed emissions were less than 25 scfh
  • 90 percent of emissions detected were from 12 percent of the sites
  • Two sites – an oil well that had a sucker rod packing issue on its pump jack (137 scfh) and a natural gas well with an open hole in the wellhead casing (156 scfh) – accounted for 40 percent of the overall emissions detected

Unfortunately, it is unclear as to whether the DOE study will be finalized in time to be considered by the EPA in its rule finalization process this summer. When completed, the DOE study will provide the most definitive marginal well methane emissions profile to date.

Some who have been following the methane emission debate might recall the fact that there was previously no significant research on marginal wells sufficient enough to justify methane rules on marginal wells – that was the impetus for the DOE study in the first place. EDF claims that its new study fills that gap. But that claim is highly debatable at best and the study warrants some serious scrutiny.

It’s Time For Energy Reality to Take Center Stage

When it comes to energy, rhetoric sure seems to get a lot more attention than reality.

If many politicians and media outlets were to be believed, the “green” energy transition is just around the corner and the permanent cancellation of our hydrocarbon fuel-driven society is imminent. But in reality, we are going to need even more traditional energy sources such as oil and natural gas than we are currently using in the decades to come. And it’s not just the fossil fuel industry making that assertion.

The Biden administration’s own Energy Information Administration (EIA) contradicts its boss’s energy narrative in its latest annual energy outlook, noting that petroleum and natural gas will likely be used in higher quantities than they are today nearly three decades from now and will remain the United States’ leading energy sources through at least 2050.

That is not a misprint. EIA deputy administrator Stephen Nalley even said plainly during the report’s rollout, “We do not see liquid fuels and natural gas losing their place as the top two sources of energy in the US to 2050. That appears to be true under a pretty wide variety of assumptions about economic growth, technology and energy development costs and prices.”

Why has the EIA consistently reached this conclusion over the past several years? Because as a non-political entity, it has to take into account the reality that a sudden switch to reliance on weather- and foreign mineral-dependent technologies for all of our electricity and transportation needs simply isn’t feasible.

Throw in the fact that that 40 percent of the world’s oil consumption can be attributed to making everything from “mascara to medical devices,” as NBC News recently reported, and it’s clear that reality should take precedent over rhetoric when it comes to policies concerning our domestic oil and natural gas supply.

The current crisis in Europe provides the ultimate reality check and a prime example of a model the United States needs to avoid. Germany, the European Union’s largest economy, has been doing everything in its power to cancel oil and natural gas for the past 20 years. So how is it going?

Germany’s taxpayer-funded renewable energy push known as “Energiewende” has left it with the highest retail electricity costs in the world. A recent IEEE Spectrum report also concluded, “Without anything like the expensive, target-mandated Energiewende, the United States has decarbonized at least as fast as Germany, the supposed poster child of emerging greenness.” And despite all of its “green” policies, petroleum remains Germany’s leading source of energy. Where does Germany get most of its petroleum? You guessed it – Russia. Same story for its natural gas supply.

The fundamental need for oil and natural gas can explain why even Tesla founder Elon Musk is realistic about the need for the United States to produce as much of both as possible within its borders. Musk recently tweeted, “Hate to say it, but we need to increase oil and gas output immediately. Extraordinary times demand extraordinary measures.” Musk also stated in a December interview that, “The reality is, if we didn’t have oil and gas right now, civilization would collapse and everyone would be starving. So, we also need oil and gas right now. It would be absurd to just stop it. It’s not feasible.”

As Musk is likely aware, widespread EV adoption will require massive increases in mineral mining for batteries and other components. China currently enjoys a virtual monopoly in mineral mining, processing and manufacturing of components necessary for solar panels, wind turbines and EVs. This explains why simply “going green” won’t result in energy independence any time soon. With those supply-chain issues in mind, the aforementioned EIA report notes that despite all the hoopla about EVs, gasoline-powered vehicles will likely represent 79 percent of new personal vehicle sales by 2050 and internal combustion engine vehicles won’t peak until 2038.

Though striving to improve our energy sources remains a noble quest for the future, we must focus on the reality of the present moment. We will need oil and natural gas for many decades to come and it is best to produce as much of it here in the United States as possible to avoid the dependence that is threatening the security of Germany and our other European allies.

Illinois Oil Producers Have No Control Over Pump Prices

The following was published as a guest column in the Alton Telegraph, Centralia/Mt. Vernon Sentinel, Kankakee Daily Journal and Villagers' Voice.

As gasoline prices soar to unprecedented levels, the narrative that oil companies are price gouging at the pump is becoming quite prevalent. But as Politico recently reported, though many are blaming oil companies for high prices, “the facts don’t back them up.”

Facts are indeed a stubborn thing.

Fact: the Federal Trade Commission, state attorneys general and consumer groups have spearheaded hundreds of lawsuits and investigations into alleged oil company price gouging and have turned up zero evidence that any coordinated manipulation of oil markets has taken place.

Fact: oil companies – and particularly the small, independent producers most prevalent here in Illinois – have absolutely no ability to control prices. If they did, they certainly would have never allowed oil prices to go negative in April 2020.

Fact: Crude oil and gasoline, the latter a refined petroleum product, are globally traded commodities and their prices are determined by global supply and demand.

At the moment, global demand is soaring toward all-time highs while supply has been limited by a decade of underinvestment in new drilling, a phenomenon that has been fueled by both government policies and the hydrocarbon divestment movement. These are the primary reasons why oil and gasoline prices are so high and likely will remain high for some time. The ban of Russian energy imports by several nations and private companies has only made an already bad supply/demand imbalance worse.

Here in Illinois, where there are no publicly traded companies producing oil, our small independent operators are typically three layers removed from the gasoline and diesel that is eventually purchased by consumers. A vast majority of Illinois oil producers sell their crude oil to midstream companies commonly known as first purchasers. The price oil producers receive from the sale of their crude to first purchasers is based on the posted domestic West Texas Intermediate price at the time of the sale, with a transportation and storage fee deducted from that base price. The first-purchaser then sells the crude oil to a refinery. Following the conversion of that crude into fuels, refineries eventually sell gasoline and diesel to a petroleum marketer. The finished product is then sold to services stations that ultimately determine the pump price.

So next time you’re driving by a gas station and feel compelled to curse at the sky-high price posted on the sign out front, please consider sparing Illinois oil producers from your ire.

The fact of the matter is, the world still runs on oil and will for decades to come. A vast majority of our transportation fuels are petroleum-based. In addition to our personal vehicles, more than 70 percent of all goods shipped in the U.S. are transported by predominantly diesel-powered trucks. And as NBC News recently reported, 40 percent of the world’s petroleum demand “can be found in everything from mascara to medical devices” in the more than 6,000 petroleum-based products that we use every day.

That’s why even Tesla CEO and founder Elon Musk has acknowledged that “we need to increase oil and gas output immediately” and “civilization would collapse and everyone would be starving” if we eliminated oil and natural gas right now.

The Biden administration’s Energy Information Administration (EIA) even projects we will not only need oil and natural gas decades from now – but that we’ll actually need more than we are currently using by 2050. As EIA Deputy Administrator Stephen Nalley recently said, “We do not see liquid fuels and natural gas losing their place as the top two sources of energy in the US to 2050. That appears to be true under a pretty wide variety of assumptions about economic growth, technology and energy development costs and prices.”

Bottom line – lowering pump prices and energy costs won’t be as simple as everyone just buying an electric vehicle. We must develop as many domestic energy resources as possible with the knowledge that our economic and national security depends on it. Anyone who doubts that fact need only look at Europe, which is dealing with sky-high energy costs while relying on Russia for a quarter of its crude oil and 40 percent of its natural gas imports.

Five Reasons Pump Prices Are So High in Illinois

Why are pump prices SO high right now – especially here in Illinois? There are a myriad of reasons, many of which have nothing to do with Russia’s invasion of Ukraine and the subsequent U.S. ban on Russian energy imports. Here the top five reasons pump prices are at record highs.

  1. First and foremost, oil demand is off the charts. U.S. oil demand recently hits an all-time record for this time of year of 22 million barrels per day. Global demand is near pre-pandemic record highs as well.
  2. Oil supply is unable to meet current demand. The Environmental, Social and Corporate Governance (ESG) movement has driven new oil and gas investment down 50% since 2011. Coupled federal policies aimed at discouraging oil and natural gas development, this has kept U.S. production below pre-pandemic levels.
  3. OPEC+ has also failed to meet its recent production quotas and it’s been widely reported that the cartel’s spare capacity could be exhausted by the end of the year. Coupled with stagnant U.S. production, this has left the global market undersupplied. This directly impacts pump prices, which are driven largely by the global market.
  4. At the regional level, Illinois’ gasoline tax burden – totaling 78 cents per gallon when state, federal and local taxes are added up – is the second-highest in the country. This explains why gasoline is so much cheaper across the border in Missouri, Wisconsin, Indiana and Kentucky.
  5. Russia’s invasion of Ukraine – and subsequent bans on Russian energy imports – has piled on top of the aforementioned factors to send pump prices soaring past the $4 threshold. The removal of barrels from the world’s second-leading oil producer and exporter has sent an already undersupplied global market into disarray. Notably, pump prices would soar to unthinkable levels should European nations such as Germany ban Russian energy imports. However, most European nations are so overly reliant on Russian oil and natural gas that they will likely NOT impose formal sanctions on Russian energy.

President Biden has suggested price gouging is to blame for rising pump prices, but a September Associated Press fact check debunked that claim.

Oil is a globally traded commodity and oil companies have no control over the price of oil or gasoline prices. If they did, they certainly would have never let oil prices go negative like they did last spring when the Covid-19 pandemic sent oil demand plummeting.

Although Illinois has the potential to produce more oil than it’s currently producing, Illinois producers also have no control over pump prices. Illinois produces between 20,000-21,000 barrels of oil per day and the world consumes 100 MILLION barrels per day. However, increased United States production can help lower pump prices and improve our energy security. Even Tesla founder and CEO Elon Musk has called for increased U.S. oil and natural gas production to deal with this crisis, indicating that not even he believes this issue can be resolved by Americans simply going out and buying electric vehicles.

The United States will need to increase all forms of domestically produced energy to blunt the impacts of this crisis. Fortunately we are in much better shape than the European Union, which is dangerously reliant on Russia for its energy needs and also overly dependent on weather-reliant alternative sources that have left it vulnerable to Vladimir Putin's aggression.

Illinois Crude Oil Production Totaled Just Under 7.4 Million Barrels in 2021

Illinois crude oil production totaled 7,397,119 barrels in 2021, according to data compiled by the Illinois Petroleum Resources Board (IPRB) that is based on first-purchaser reports. Click here to download IPRB’s annual Illinois oil production report.

The state’s 2021 production was slightly below 2020 levels (7,513,835), as extreme cold weather in February and labor shortages throughout the year were factors in production remaining 1.5 percent below last year’s levels despite a strong rebound in oil prices following the demand-driven crash brought on by the Covid-19 pandemic.

Several counties did see increased production compared to 2020 levels, most notably Franklin County, which saw its production jump 19 percent to 309,484 barrels. Crawford County saw the second-largest year-over-year increase (+23,600 barrels), while Macon, Jefferson, Christian, Clay, Richland and Clinton counties also saw significant production increases compared to 2020.

White County remained by far Illinois’ top producing county, totaling 2,166,099 barrels of production in 2021, representing better than 29 percent of the state’s overall production.

White County surpassed 2 million barrels of production for the third straight year and its annual production has more than doubled from levels seen just a decade ago.

The state’s top-15 producing counties – White, Marion, Crawford, Fayette, Lawrence, Wabash, Franklin, Clay, Wayne, Clark, Richland, Hamilton, Jasper, Jefferson and Gallatin – collectively produced 90.5 percent of the state’s oil in 2021. All 15 of those counties – as well as Edwards, Brown and Effingham counties – have recently passed Resolutions of Support for the Illinois oil production industry.

Updated Report: Illinois Oil Reserves Generated $104.5M in Local Property Tax Revenue From 2007-2020

Many Illinoisans may not be aware that the state’s active oil and natural gas production leases are assessed and taxed as real estate, similar to property taxes paid on a residential home. All of the revenue collected from this tax – known as an ad valorem tax – stays at the local level and goes directly to support the areas where oil is produced, including counties, villages, townships, cities, and – most importantly – local schools.

An IPRB review of the latest Illinois Department of Revenue (DOR) data shows that Illinois oil reserves generated $104.5 million in ad valorem tax revenue from 2007 to 2020, an average of more than $7.46 million per year. IPRB details this revenue in an updated annual report that can be downloaded here and by clicking the image below.

IPRB also explains in the following video how this tax revenue helps communities where oil and natural gas are produced.

Typically, at least half of ad valorem property tax revenue is used to fund public education, while the remaining monies are used to fund various local public services. That fact noted, IPRB conservatively estimates that Illinois oil reserves generated at least $52.25 million in ad valorem tax revenue for schools in producing counties from 2007-2020. This revenue is all the more significant considering Illinois public schools were woefully underfunded by the state during this time frame, placing even more burden at the local level.

Ad valorem tax revenue from Illinois oil production has a particularly significant impact in major producing counties. IDOR data show that ad valorem tax revenue in Illinois’ top-15 oil producing counties totaled $93.16 million from 2007-2020, an average of more than $6.65 million per year. See the graphic below for revenue totals in each of the state's top-15 oil producing counties.

IPRB conservatively estimates that at least $46.58 million of that revenue went to public schools in those top-15 producing counties.

It is important to note that many of these counties have relatively small populations and are relatively poor compared to many other state counties and the state as a whole. In fact, all but one of Illinois’ top oil producing counties (Crawford) have poverty rates that are higher than the national average – adding even more significance to the ad valorem tax revenue generated by oil and natural gas reserves in these counties. Just two percent of Illinois’ overall population resides in these top-15 producing counties, which are responsible for 90 percent of Illinois oil production.

County-level reports for each of Illinois’ top-15 producing counties can be downloaded at the links below. An example of the county-level reports can also be viewed below.

It is important to understand that these taxes are based on estimates of oil and gas reserves remaining in the ground, not oil and natural gas produced. The annual ad valorem tax bill that operators and royalty owners receive is also based on data that is over two years old. For example, ad valorem taxes paid in 2017 were based on a 2016 assessment of active leases that is calculated using 2015 production totals. There are also reductions for leases based upon lease age, secondary recovery methods used and production.

As complicated as the ad valorem tax calculation system may be, it is clear that these taxes are generating significant revenues in the communities where they operate, specifically for local schools.