The price at the pump has had more swings than a schoolyard playground of the past couple of months, and consumers can expect more. Yet America is on track to take more long-term control over its destiny with fuel prices, as we continue to realize the benefits of increased domestic oil and natural gas production.
While we won’t be returning to $2.50 gas any time soon, there are some positive influences on future gas prices. The domestic oil and natural gas revolution is helping us reduce the overall share of foreign oil in our daily consumption. Oil from domestic sources is generally less expensive than oil imported from overseas which puts downward pressure on gas prices and keeps our oil dollars here at home.
Also, according to the Energy Information Administration, U.S. refiners have increased their capacity by nearly 3% in the past year. This increased capacity, coupled with new sources of domestic oil will help to mitigate prices shocks and put downward pressure on gas prices. As we even out the volatility in the market with increased domestic production and a reduced reliance on foreign oil sources, consumers will benefit.
These trends, combined with advancements in automotive fuel economy and engine technology, a shift towards diesel engines in passenger vehicles, and improvements in urban and municipal transportation systems will help reduce aggregate demand for gasoline. These combined factors will help keep downward pressure on gasoline prices even as global demand for oil increases.
Energy policy should continue to support the increased domestic production of crude oil, expanded refining capacity, a reduction in compliance costs, development of energy infrastructure and additional improvements to CAFE standards.