What independence? Pump prices rise with production


This isn’t supposed to happen. Drivers in the U.S. are headed for the most expensive year ever for gasoline. GasBuddy, which tracks pump prices, reports that the average price nationally is $3.63 a gallon so far this year, and even though prices are falling, they aren’t likely to fall enough in the next month to keep this from being the most costly year for U.S. gasoline.

The higher prices show why we shouldn’t delude ourselves with notions of energy independence. Higher retail prices for gasoline are hitting at the same that U.S. production is rising to its highest level in years, thanks to the hydraulic fracturing boom. The problem, of course, is that oil is sold on a global market. The price isn’t set in the U.S. While increasing production at home certainly has some benefit, rising U.S. production can’t keep pace with rising demand from emerging economies such as China and India.

For the past few years, global oil prices have shown a tendency to rise regardless of production, and that same trend is playing out domestically as well.

In other words, American consumers should get used to the idea of paying more that pump, even as we hear U.S. energy producers tout their increased production. We’re likely to see average prices for gasoline continue to creep up over time, regardless of how much oil is pumped out of the ground in North Dakota and South Texas.