Despite Being the World’s Biggest Oil Producer, U.S. Oil Prices are Hitting the Roof

The oilfields of Texas, Alaska and other regions across the United States have made the country the world’s largest oil producer, pumping more than 13 million barrels per day.

The US produces enormous amounts of crude oil, but the country’s refining system was largely built decades ago to process heavier, more sulfur-rich crude.

That has not stopped gasoline prices at the pump from rising in the week since the conflict in Iran began, Jake Conley reported for Yahoo Finance.

The national average for gasoline now sits at $3.32 per gallon, up from $2.98 a week ago, according to the American Automobile Association (AAA) — roughly a $0.34 increase.

The apparent contradiction reflects a basic reality of the global energy system: Even though the US has become a crude oil superpower, gasoline prices are tied to a global market where supply disruptions thousands of miles away can quickly ripple back to American consumers.

The US produces enormous amounts of crude oil, but the country’s refining system was largely built decades ago to process heavier, more sulfur-rich crude.

Much of the boom in US output over the past decade has come from shale fields that produce lighter, “sweeter” crude.

Oil is traded on a global market, meaning prices respond to changes in worldwide supply and demand rather than the production of any single country.

When traders worry that a major supply route like the Strait of Hormuz — which carries roughly a fifth of global oil flows — could be disrupted, crude prices tend to rise everywhere, including in the US.

Over the past week, Iran has brought traffic through the strait essentially to a standstill and begun targeting key energy infrastructure in the region, including Saudi Aramco’s Ras Tanura refinery and oil tankers in the Persian Gulf.