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Posted on 04/01/2026 6:59:57 PM PDT by CondoleezzaProtege
If the United States is the world’s largest oil producer—in fact, if we are energy independent—then why are we still at the mercy of global events? And how can prices spike instantly when the gasoline in the tank was made from cheaper oil weeks ago?
People like easy answers, such as “corporate greed.” That is emotionally satisfying, but it doesn’t tell the full story. What’s happening is a function of global markets, supply chain realities, and predictable patterns in consumer behavior. In fact, much of what we’re seeing is exactly how the system is designed to work.
The U.S. leads the world in oil production, but oil isn’t priced locally, nor are prices set by oil companies. Because the U.S. exports oil to the global markets, it’s priced globally by traders bidding for oil. That is a distinction many people do not realize.
Think of the oil market as a single, interconnected system. When supply is threatened anywhere, prices respond everywhere. And few places matter more than the Strait of Hormuz, a narrow passage through which ~20% of the world’s oil flows. When that chokepoint is at risk, traders price in the risk immediately.
That’s why a barrel of oil in Texas suddenly becomes more expensive even if nothing has changed domestically. U.S. producers sell into global markets, so American refiners have to match those prices or lose supply. Being the largest producer doesn’t shield us, it simply means we are deeply embedded in the same global system.
The second frustration—why prices jump before “cheap” gasoline is sold—comes down to replacement cost...
It’s also important to distinguish between different parts of the oil industry, because not all companies benefit equally from rising prices...
(Excerpt) Read more at forbes.com ...
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Good for you; they just went up here...again in a very short time. Now, our local prices are not nearly as bad as some, but they are now higher than they were a very short time ago. I’m debating as to whether it is wise to fill up as soon as possible before it gets much higher, or to wait in hopes that prices will soon start down again. Right now, it’s just a guessing game here.
Somebody needs to teach the author the meaning of the word “fungible”.
CC
Gas in my area is over $5 per gallon.
Buy it when you need it to save you trips to the gas station. It will continue to rise and not go down for a very long time. The war will continue to go on. Countries will blow through their stratrgic reserves and have none.
The article here was interesting in explaining why oil & gas are priced as they are. Pretty good explanation I think.
I paid $2.97/gal in Springfield MO last weekend. It’s like the price manipulation never happened.
That’s all this is - price manipulation. We import 0.0% of our oil from Iran and very little from the Persian Gulf.
They did it in Covid and under Biden and they’re doing it again - because they can. But it cost absolutely no more to produce and deliver a gallon of gas today than it did the day before the war started. At least we’re getting something in return this time.
Graft.
wy69
great question. wondered myself.
so Mr. President, if this article is right, please get busy creating a local market and incentives for our own producers and refiners. thank you for your attention to this matter!
Our markets are open - when there’s a shortage halfway across the world, those buyers come here to compete for our oil. It’s how markets work.
Not always: Canadian oil almost all has only one place to go: The USA, due to lack of infrastructure to take it elsewhere. The US also now controls where Venezuelan oil goes.
Granted we do not control resale, or sale of the refined products made with that oil, but, we COULD, by limiting exports. We DID just that, from 1975-2015, the difference being that we didn’t have a surplus until later on.
Many large producers (countries) also manipulate exports to “force” low pricing in their domestic markets.
All very socialist.
Which makes it notable that that 40 year old USA export limit was rescinded under... Obama.
A crazy world, isn’t it?
Market manipulation. The price at the wellhead is not going up. This is all artificial
Many gas stations used to post little signs showing how much of gasoline prices went to taxes, etc., and how little went to gas station operators. They’d do that especially during price jumps when people were complaining. I wonder why they no longer do that.
Granted that these days, half the time the lazy employees don’t keep paper in the receipt printer.
If I was a gas station owner, I’d put it on the receipts, too.
Canadian oil has virtually no infrastructure to go anywhere but the USA, at least as its initial destination. To some extent, we can thank Canadian greenies and Warren Buffet for that, so, I guess they are not all bad...
You can thank Demonrat Barack Obama for that. At the end of his reign of error, he lifted the oil and gas export restrictions.
That’s disingenuous data. We export more than we import, said exports often in the form of refined products. A plastic cell phone case might well have US oil in it.
There IS some dependency to get good mixes for refining, but essentially we sell (export) a lot of very desirable light sweet crude to make up for that. Now that we “have” Venezuela, we have an additional source of heavy crude under our control.
What few people realize is that our petroleum exports get counted as part of our oil “consumption” in the data.
Actually, cost IS up. Try getting insurance on a shipment in or through the Middle East. Because the markets are global, that affects us.
Granted that we can go full bore socialist again and slap in place export limits on our own oil, like we did in 1975. However, that can cause undesirable market distortions in other ways, as is typical of socialist policies.
Great thread: It has stimulated many good comments, and, some really dumb ones too, but, that’s ok.
I and others have brought up the topic of banning or limiting US oil exports, which is just about as socialist a policy as one could get.
Socialist policies usually have very bad (if often not directly seen) fallout. But, then again, wartime is not a good time for rigid ideology. I am undecided on the matter, as while these energy prices are EXTREMELY painful for me / my family, I suspect I do not “see” all the negative fallout that may develop if export limits are slapped on US oil and refined products.
Trump is in fact encouraging oil importing countries to buy US oil — which competition will drive up US prices, but helps our balance of trade.
Perhaps short term export limits with very strong “sunset” provisions might be acceptable?
What do FReepers think, and are most FReepers even conservatives any more?
(If you are inclined, you may want to post this as a vanity type thread? I am hesitant to do so, as I’m going to be extremely busy and won’t have much time to reply to commenters... The mods typically don’t like “post and run” threads.)
Well you can always move to Cuba!
Y’all don’t understand the perils of socialism very well, do ya’?
OTOH, if the Strait doesn’t open up, we, and Trump, have a big problem, if oil prices are unaddressed.
I’d rather fix the problem than slap on a plastic fix.
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