The United States has finally started exporting more oil to other countries than it imports. The U.S. hasn’t crested this oil trade threshold since January 1997. There are entire generations of Americans who have grown up not knowing anything other than the dominance of foreign oil imports typically from the Middle East.
U.S. crude oil imports formerly averaged approximately 9 million barrels per day from other countries. This dwarfed the country’s domestic output of just 3.5 million barrels a day. That is until this week when, after the tide slowly started turning over the past few years, exports finally surpassed imports according to the Department of Energy and the Energy Information Administration (EIA). This change is a result of the increase of fracking in the United States and the discovery of the vast oil fields in North and South Dakota.
But, unfortunately, this new found wealth of domestic oil may not translate into cheaper gasoline for Americans at the pump this summer. Gas prices are set by a host of factors, not simply the price of a barrel of crude oil and how much of it is discovered domestically.
The price of gasoline, which is a refined oil product, depends on factors like the capacity of local refineries, their locations, lack of cheap transportation, refinery maintenance, the delay in opening the Keystone Pipeline, and the like.
According to AAA, prices continue to fluctuate within a very tight range across the country from late spring to early summer. However, AAA expects gasoline prices to be lower nationally as the summer continues. Gasoline prices are expected to drop below the recent national average of $3.50 per gallon later in the summer. But, this may be a short reprieve if more refineries do not come online to produce more gasoline. The summer driving season is when gasoline prices typically spike because of the higher amount of driving Americans do in the summer.
While gas prices are the quintessential example of supply and demand at work in the market, there are other external forces at work driving the price of gas higher. Or, in the case of the recent increase in U.S. oil exports, gas prices remain consistent, fighting the pressure to increase this summer thanks to outside factors and the increase in domestic production.