U.S. oil production is up, so why are gas prices so high?
— -- Given America's new oil rush, it would seem the best of times for gas prices. But with $4-per-gallon sticker shock, it might feel like the worst of times.
How can this be?
The question is all the more perplexing, because the United States is not only producing more crude oil but also using less of it. As a result, net oil imports have dropped a third since 2005.
With such good fortune, America's soaring pump prices seem to defy the laws of supply and demand — except for one fact: It's increasingly not just about us.
U.S. gas prices are largely determined by global crude oil prices, which depend on a widening and shifting array of factors half a world away: economic sanctions on Iran; deepwater drilling off Brazil; spare oil capacity in Saudi Arabia; auto use in China; less nuclear power in Japan.
So oil rigs may be hopping in North Dakota, but what happens in the Strait of Hormuz will likely have more impact on prices at the local gas station — even though the U.S. doesn't import a single gallon from Iran.
"The market for oil is global," says Neelesh Nerurkar of the Congressional Research Service, the research arm of Congress, who co-wrote a paper on 2012's rising gas prices. He says although the U.S. imported almost no oil from Libya, unrest there last year cut the world's crude oil supply and thus drove up gas prices here.
"It's frustrating to everybody," says Howard Gruenspecht, acting administrator of the U.S. Energy Information Administration, referring to the U.S.' limited ability to control its own gas prices despite its oil boom. His agency says the U.S. increased production of oil and petroleum products about 20% since 2008, but the amount was only 11% of the world's supply last year and 53% of what the nation used.
Federal laws do not generally allow crude oil that's produced in the U.S. to be exported but permit the export of refined products that come from it — such as gasoline, diesel and jet fuel. Last year, for the first time since 1949, the U.S. became a net exporter of these products. Most gasoline exports go from Gulf Coast refineries to Latin America, where demand is booming.
"They're not keeping it just for us," President Obama said this month about U.S. oil companies, noting they sell on the international market. As a result, he said, "We can't just drill our way out of this problem."
He argued the only true solution to high gas prices is independence from fossil fuels, adding: "I don't want our kids to be held hostage to events on the other side of the world."
His likely GOP presidential opponent, former Massachusetts governor Mitt Romney, partly blames Obama for gas prices, saying he should do more to expand U.S. oil production and pipeline capacity. When Obama was running for president in 2008, he partly blamed then-president George Bush for that year's surge in gas prices.
"The reality is that presidents have very little to do with near-term fluctuations in gasoline prices," Frank Verrastro, director of the energy program at the Center for Strategic and International Studies, told a U.S. Senate panel last month.
Here's a look at five factors that do:
1. Global crude oil price increases.
