• 5 minutes Covid-19 logarithmic growth
  • 8 minutes Why Trump Is Right to Re-Open the Economy
  • 12 minutes Charts of COVID-19 Fatality Rate by Age and Sex
  • 14 minutes China Takes Axe To Alternative Energy Funding, Slashing Subsidies For Solar And Wind
  • 3 hours Its going to be an oil bloodbath
  • 42 mins Trump will meet with executives in the energy industry to discuss the impact of COVID-19
  • 2 hours What If ‘We’d Adopted A More Conventional Response To This Epidemic?’
  • 1 hour Marine based energy generation
  • 2 hours Cpt Lauren Dowsett
  • 2 hours The Most Annoying Person You Have Encountered During Lockdown
  • 4 hours Which producers will shut in first?
  • 17 mins US Shale Resilience: Oil Industry Experts Say Shale Will Rise Again
  • 13 hours CDC covid19 coverup?
  • 3 hours Real Death Toll In CCP Virus May Be 12X Official Toll
  • 3 hours Washington doctor removed from his post, over covid
  • 13 hours How to Create a Pandemic
  • 13 hours Iran-Turkey gas pipeline goes kaboom. Bad people blamed.

Breaking News:

IEA: OPEC Can’t Save The Oil Market

Alt Text

The True Cost Of “Freedom Gas”

The United States is betting…

Alt Text

Why Are Natural Gas Prices Crashing?

Natural gas inventories remain remarkably…

Alt Text

The Cure For Low Gas Prices Is Low Gas Prices

Soaring debt and very low…

Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

More Info

Premium Content

U.S. Oil Boom Makes Gas Cheaper, but not by Much

Crude oil sourced in the United States is cheaper and therefore means less pain at the pump for American drivers. When adjusted for inflation, however, the price for a gallon of regular unleaded gasoline is still high because of international dynamics, AAA said Monday.

"Cheaper domestic crude has a significant effect on the price most of us pay at the pump," AAA spokesman Michael Green told Oilprice. "U.S. refineries have access to cheaper crude oil than their overseas competitors, which provides a lucrative business advantage."

The U.S. Energy Information Administration said U.S. oil production should hit 9.6 million barrels per day before 2020, the highest level in more than 40 years. Most of the increase in production comes from so-called tight oil formations and EIA said production trends should continue into the next decade.

Related Article: What Happens After the Boom?

Green said prices at the pump have decreased along with increased U.S. oil production. The spring national average for a gallon of regular unleaded in 2011 peaked at $3.98, but shouldn't pass the $3.65 per gallon mark this season. The national average price for Monday was $3.58 per gallon.

"Without the surge in domestic crude oil production and expanded refinery capacity, it is likely that drivers in most parts of the country would be paying at or near $4.00 per gallon this spring for gasoline," Green said.

Only Hawaii and California had state average prices above the $4.00 mark and most of that was because of higher taxes than the other 48 states.

Green said the spread between the price of West Texas Intermediate crude oil, the U.S. benchmark, and Brent, the global benchmark, has been higher than usual at least since February 2012. That means there's an abundance of cheaper oil at home, which makes the U.S. energy market look good compared with the rest of the world.

Nevertheless, market factors beyond the U.S. border are keeping gasoline prices high, relatively speaking. When adjusted for inflation, the $2.09 per gallon reported as a national average this week in 2009 would be $2.29 today. Green said prices are so much more expensive now because demand for energy is increasing in China and other developing nations, which makes oil prices rise in response.

Related Article: Spring Fever Could Lead to Increase in Gas Demand

For U.S. consumers then, AAA said gasoline prices are still considered too expensive despite the shale boom. AAA data show more than half of the people in the country consider $3.50 too much to pay for a gallon of gasoline.

"These results show that despite the increase in domestic production, prices still have not dropped to as low as most people in the public would expect and want," Green said.

For the ending March 31, EIA said U.S. drivers paid at least $3.00 per gallon than their European counterparts, however.

By Daniel J. Graeber of Oilprice.com


Download The Free Oilprice App Today

Back to homepage






Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News