Take a look at gas prices at the pumps today and you’d have no idea that not only is consumer gas consumption way down, but domestic oil production in the US is accelerating like there’s no tomorrow.
Despite all of the above, gas prices are creeping higher by the day and we could be looking at the $4 per gallon mark as early as May, unless something gives in the meantime.
Why? Not a clue…most seem to be completely stumped by it all.
Over the course of last year, domestic oil production in the US increased to a solid 6.5 million barrels per day, representing gains of at least 14% which is by rights an all-time record. And over the course of the next 17 years, the US is expected to become the biggest producer of crude oil in the world, overtaking Saudi Arabia comfortably by 2020.
And as if this wouldn’t be enough to see prices tumbling, demand for gasoline in the US has plummeted to its lowest level in 12 years – now coming out at 8.7 million barrels per day as a result of more frugal driving habits and vehicle fuel-efficiency.
Instead however, gap prices are going up, up and as far as the future outlook goes, up some more.
So what gives? Has something gone unnoticed?
Not in the slightest, it’s just a case of the markets being played in favor of those making the big bucks behind the scenes.
In the simplest terms, the global market for gasoline is exploding at record-pace which in turn means that every last drop of gas produced in the US is in huge demand all over the world. Or in other words, drivers in the US are competing with drivers all over the world for supply of gasoline. Gas can and most probably always will be sold to the highest bidder as supply and demand dictates, which means that while the US might be enjoying the most bountiful supply of gas and lowest demand to date, the picture is quite to the contrary in other nations.
And the bad news – it’s only likely to get worse before it gets any better, so don’t be expecting much relief at the pumps anytime soon.