Independence Day Gasoline Prices Lowest Since 2005 — Thanks to Fracking!
Americans hitting the road this extended Fourth of July weekend are doing so on the cheap, thanks to the lowest Independence Day gas prices since 2005. GasBuddy, a nationwide price monitoring site, has projected a gallon of gas will cost drivers an average of $2.21 over the holiday.
That’s good news for the record 37.5 million expected to hit the roads over the Fourth of July and strong proof that America’s renewed shale boom is having positive impacts across the economy.
These low prices at the pump — well below the 10-year average of $3.14 — can be traced directly to America’s newfound ability to export oil and influence the global Brent price standard for which refined products, such as gasoline, are based on.
Since the 40-year-old crude oil export ban was lifted in 2015, crude exports are now happening at double the rate they were in 2016. Considering more than half of the U.S.’s near-record oil production comes from shale formations — and these formations typically produce a lighter crude than the heavy crude most U.S. refineries are set up to process — this has helped alleviate some of the supply glut that drove down domestic oil prices (West Texas Index).
In turn, this influx of American oil onto the global market has driven down the Brent price and resulted in savings at the pump. Equally important, this new American oil in the global energy market has yielded considerably less power for OPEC, which traditionally had a dominant place and so was able to manipulate the marketplace and drive up prices for consumers at the pump in years past.
Contrary to what opponents of lifting the export ban predicted, a recent examination by the Wall Street Journal reveals that the lifting of the export ban is a big part of what’s keeping prices at the pump so low. Meanwhile, most of our remaining imported heavy crude now comes from close allies like Canada. As the Wall Street Journal puts it,
“The U.S. is now emerging as the world’s energy superpower and U.S. oil and gas exports are rebalancing global markets. Thanks largely to the domestic hydraulic fracturing revolution, the U.S. has been the world’s top natural gas producer since 2009, passing Russia, and the top producer of oil and petroleum hydrocarbons since 2014, passing Saudi Arabia.”
All this means drivers will be feeling the benefits of hydraulic fracturing at the pump over the Fourth of July holiday while OPEC continues grappling with a new era of American energy dominance.
Happy Independence Day!