As much as American political leaders have been talking up the case for energy independence, investing in oil exploration might not have the immediate effect that many commuters are hoping.
It’s hard not to notice that gasoline prices today are still high and going up, even with domestic oil and gas exploration turning around the country’s long decline in production.
The U.S. Energy Information Administration reports that average gasoline prices at the start of the millennium sat at only $1.329 per gallon. By mid-2008, they had peaked at $4.114 per gallon during the run-up in oil prices.
Since then, though, U.S. oil production has surged from only 5 million barrels per day – its lowest point since the middle of the 1940s – to more than 6.5 million barrels per day in 2012. That amounts growth of more than 30 percent in just four years.
And yet, gasoline prices still reached nearly $3.80 per gallon as recently as March 2013.
The issue is that, more and more, American oil producers are serving more than just the domestic market. While crude oil exports are largely illegal because of some long-standing protectionist policies, the U.S. is one of the world’s largest exporters of refined petroleum products, seeing a compound annual growth rate of 15.7 percent between 2000 and 2013.
In fact, the country became a net exporter of petroleum products for the first time in more than 60 years in 2011.
The dramatic growth continues, as well. Just between January 2012 and January 2013, gasoline exports rose from 6.8 million barrels to 16.9 million barrels.
It’s not hard to see why either. While gasoline prices in the U.S. are historically high, the World Bank reports that other countries around the world see dramatically higher costs. Norway, itself an important oil producer for Europe, averaged gasoline prices in 2012 of $2.53 per liter – around $9.58 per gallon.
With prices around the world regularly reaching more than double what companies see in the U.S., the demand for American oil products abroad is not likely to fall anytime soon. For American consumers, that’s unfortunate news, since it means gasoline prices are only really likely to rise in the long term.
For oil investors, it’s good news, for much the same reason.