NEW YORK — The U.S. is increasing its oil production faster than ever and U.S. drivers are guzzling less gas. But you’d never know it from the price at the pump.
The national average price of gasoline is $3.69 per gallon and it is forecast to creep higher and could approach $4 by May. For the year, prices are forecast to average $3.55 per gallon, slightly lower than last year’s record average of $3.63.
“I just don’t get it,” says Steve Laffoon, 61, a part-time mental health worker, who recently paid $3.59 per gallon to fill up in St. Louis.
U.S. oil output rose 14 percent to 6.5 million barrels per day last year — a record increase — and the nation is forecast to overtake Saudi Arabia by 2020 as the world’s largest crude oil producer. At the same time, U.S. gasoline demand has fallen to 8.7 million barrels a day, its lowest level since 2001, as people switch to more fuel efficient cars.
So is the high price of gasoline a signal that markets aren’t working properly?
Not at all, experts say. The laws of supply and demand are working, just not in the way U.S. drivers want them to.
U.S. drivers are competing with drivers worldwide for every gallon of gasoline. As the developing economies of Asia and Latin America expand, their energy consumption is rising, which puts pressure on fuel supplies and prices everywhere else.
The U.S. still consumes more oil than any other country, but demand is weak and imports are falling. That leaves China, which overtook the U.S. late last year as the world’s largest oil importer, as the single biggest influence on global demand for fuels. China’s consumption has risen 28 percent in five years, to 10.2 million barrels per day last year.