If America Is Pumping So Much Oil, Why Are Gas Prices Rising?

It’s a question I hear every time the geopolitical crisis hits the news. If the United States is the undisputed heavyweight champion of crude oil production, why are our gas prices rising at the height of the second crisis in the Middle East?

Right now, we’re watching the conflict with Iran push oil prices past $100 a barrel for the first time since 2022. You might look at the pump, look at our home drilling numbers, and feel like you’re being ripped off.

I don’t blame you. You’re not making any logical sense. But the fact that petrol gets a price is not about patriotism or national boundaries. It’s about global economics and the problems of refining.

That’s why your wallet is the best, even though it’s swimming in domestic oil.

The United States pumps an incredible amount of oil

Let’s get the facts right first. We do not lack household items. According to the US Energy Information Administration, domestic crude oil production reached a record high recently, with output exceeding 13.6 million barrels per day.

We produce dirtier than Saudi Arabia. We produce more than Russia.

If we were completely isolated from the rest of the world, that would mean cheaper greenhouse gas for everyone. But we don’t live in an isolated bubble.

Oil is a globally traded commodity

This is a very hard pill to swallow. The oil extracted from the ground in Texas is not reserved for American drivers. It is sold on the global open market to the highest bidder.

Because oil is volatile and traded around the world, the supply shock to any price shock is everywhere. Currently, the war with Iran is disrupting the Strait of Hormuz. That one small waterway is a bottleneck for the world’s electricity supply.

When global buyers panic about losing Middle Eastern oil, they start paying the price of all oil, including domestically produced stuff.

If a barrel of crude oil jumps over $100 globally, an American oil company won’t sell it to a domestic refinery for $60 just to be nice. They will sell it at the global market price. Those higher costs are passed on to you immediately at the pump.

Refinement bottle

There is another step between the oil rig and your fuel tank. Crude oil is useless until it is refined into gasoline, diesel, and jet fuel.

Even with illegal production, our refining capacity is very slow. Refineries are complex, expensive, and frequently repaired.

In addition, they must switch to more expensive summer-grade gasoline blends every spring to meet environmental regulations. If a major refinery goes offline for maintenance or an emergency, local fuel prices will rise regardless of how much crude is sitting in storage.

What you can do about it

You can’t control world markets or international conflicts, but you can control your spending. You don’t have to accept paying top dollar. Here are a few ways to fight back:

• 1. Fix your bad driving habits: Hard driving, speeding, and hard braking are bad for your wallet. As we detail in “Driving Habits That Are Ruining Your Car and Wasting Your Gas Tank,” a lead foot can decrease your gas mileage by 15% to 30% at highway speeds.
• 2. Check your tire pressure: Tires with less gravity affect your fuel efficiency. A quick fix that really saves money in the long run.
• 3. Shop strategically: Use apps to find the cheapest gas station near you, or check out “8 Smart Ways to Save Money at the Gas Pump” for other tips for finding low prices, like buying gas at warehouse clubs or using rewards programs.

If you’re looking for more practical advice on surviving these price hikes, check out our latest guide “$5 Gas Returns? How the Strait of Hormuz Chaos Affects Your Travel Trip.”