Senator Asks: Why Hasn't Increased Domestic Oil Production Reduced Gas Prices?

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From Breaking Energy:
Wyden questioned why, if crude oil prices comprise 67% of the cost of a gallon of gasoline, the availability of cheaper, domestically produced crude oil – combined with flat or declining US gasoline demand – has not led to big price cuts. “Supply is up, demand is down, but prices at the pump are still stubbornly high, and sometimes are as volatile as the gas itself,” he said.
Wyden also cast doubt on the validity of assertions that gasoline prices are closely linked to oil prices. “My sense is that may no longer be necessarily the case.”
Beyond US Borders
Wyden’s questions focused on a seeming disconnect between US gasoline prices and regional and national oil supply dynamics. But panelists explained that global markets, rather than localized production gains, are the primary determinants of both crude and product prices.
“Crude oil is indisputably a global commodity,” said Jeff Hume, Vice Chairman for Strategic Growth Initiatives at Continental Resources.
“As with crude, refined product prices are heavily influenced by the international markets,” said Energy Information Administration head Adam Sieminski. “Virtually every group that I know of that’s ever studied product markets believes that product prices are being set in the global market.”
Read the whole article here.

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