RSS
Will we ever see $3 gas again?
Despite skyrocketing domestic oil production, petrol prices are unlikely to drop any time soon
Chicago, Ill., October 2009: The good old days.
Chicago, Ill., October 2009: The good old days. Scott Olson/Getty Images
T

his has been a painful week at the pump. The national average gas price hit $3.64, up from $3.29 on Jan. 1, which was already the highest starting point of any year.

In California, drivers can expect to pay $4 for regular gas. Other states aren't far behind. So when can drivers expect relief?

Maybe never. "This is the new normal," Chris Plaushin, an official with AAA, told the Senate Energy and Natural Resources Committee. "The days of a national pump price below $3 is a thing of the past."

That is despite a 1 million barrel increase in U.S. crude oil production last year, hitting the highest daily average since 1995. Not only is production up, but people are driving less, spending 8.75 percent less time on the road than in 2005.

"Supply is up, demand is down, but prices at the pump are still stubbornly high," said committee Chairman Ron Wyden (D-Ore.).

The recent spike has been blamed on unrest in Egypt and Syria, as well as glitches at several U.S. refineries. Gas prices also typically shoot up in summer as drivers go on vacation.

While domestic oil production is up, much of it is from shale, which produces a lighter crude than most U.S. refineries are used to processing. Energy industry officials have blamed the rising prices on the renewable fuels standard, which requires refineries to blend biofuels into their gasoline.

Critics like Wyden, however, have indicated that the petroleum industry could simply be profiting from a situation that has made the United States dependent on just a few oil refineries.

No matter how much oil is produced in the United States, it might not be enough to stem the rise in gas prices. That is because oil is a global commodity, and the emerging middle classes of countries like India, Brazil, and especially China have a thirst for it. The International Energy Agency predicts that global oil demand could hit a record 92 million barrels a day in 2014.

While prices should come down in the fall, they might never drop down to 2010 levels, when the average gas price topped out at $2.99.

Keith Wagstaff is a staff writer at TheWeek.com covering politics and current events. He has previously written for such publications as TIME, Details, VICE, and the Village Voice.

EDITORS' PICKS

THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER

Subscribe to the Week