Tags: production | gas | prices | oil | crude

More Production Here, Not Overseas, Will Thwart Higher Gas Prices

More Production Here, Not Overseas, Will Thwart Higher Gas Prices
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Thursday, 02 August 2018 03:25 PM Current | Bio | Archive

Pump prices remain uncomfortably high nationwide. In some states, the average price for a gallon of regular gas is above $3.

For some, these prices are not a big deal. For others, they are — especially cash-strapped families in poverty, on fixed incomes or living paycheck to paycheck, all of whom regularly see unnecessarily high, double-digit percentages of their take-home pay go toward energy costs like gasoline, and all of whom have little in savings for last-minute setbacks.

Here's a solution: Thanks to improved techniques, innovative technologies and an array of regulations second to none globally, American producers and drillers can safely and quickly increase energy production here at home to help lower consumer prices, reduce decades-old dependence on foreign oil and add downward pressure on global oil prices without being overly concerned about how much rival foreign nations are pumping.

Per the Energy Information Administration, the U.S. is set to replace Russia as the world's top crude oil producer late next year. This is uncharted but welcoming territory for the U.S. While several factors affect the price of gas — including federal, state and local policies, taxes, refining costs, infrastructure and distribution — the largest is the price of crude oil, the main ingredient in gasoline and the pendulum that swings pump prices one way or the other.

And for the last 50-plus years, we’ve imported a lot of it, relying heavily on foreign oil to fuel our motorists.

In 2017 alone, we imported roughly 10 million barrels per day, from more than 84 countries, most of which — 79 percent — was crude. When these imports are threatened or interrupted due to political developments in countries like Saudi Arabia, Iraq or Venezuela — three countries the U.S. relies on for oil — American families and businesses feel the direct effects.

Case in point: The oil embargo of the early-1970s led to supply shortages, long waiting lines and surges in U.S. gas prices of more than 25 percent. In 1979, another oil crisis, courtesy of the Iranian Revolution, led to more long lines and a 28 percent price jump resulted. Other examples include the 1990s Gulf War, which bumped American gas prices an average of 11 percent, and the 2011 Arab Spring, civil unrest which sent gas prices spiraling 24 percent.

But since 2010, increased domestic production of oil and gas has reduced American dependence on foreign oil. It’s simple supply and demand, and the U.S. is now a major role in this economic formula. More production here has led to cuts in pump prices, leaving consumers with extra money in their pockets. And while U.S. gas prices have jumped in recent months — due in part to Iranian sanctions, geopolitical unrest in Venezuela, summer blends and improved economic growth — it’s been a modest 5 percent bump, not the back-breaking, double-digit figures we endured in previous crises.

In other words, record production of American oil has largely shielded citizens from foreign price shocks, and the more we continue to produce here, at home, the lower and more stable our fuel prices will remain.

But unless we make full use of all our domestic resources, cleaner-burning fossil fuels included, motorists here — most of whom are reliant on gas to power their vehicles and will be for decades — will again be vulnerable to political developments and conflicts that unfold around the world, and the devastating pump prices that come with them.

David Holt is president of the Consumer Energy Alliance (CEA).

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But unless we make full use of all our domestic resources, cleaner-burning fossil fuels included, motorists here will again be vulnerable to political developments and conflicts that unfold around the world, and the devastating pump prices that come with them.
production, gas, prices, oil, crude
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2018-25-02
Thursday, 02 August 2018 03:25 PM
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