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Rising Domestic Production Puts Lid On Gas Prices

Gasoline and diesel fuel prices have a long history of volatility. Beginning in the 1970’s, we began using more oil than we produced and became susceptible to import supply disruptions that would send prices soaring, and lead to occasional shortages.


During the late 70’s and through the 80’s we had a series of embargoes and other disruptions in the world oil market that produced sky high prices and long lines to buy gasoline and diesel fuel at the pump.
Then, for most of the past decade world demand caught up with production and we saw gasoline prices fluctuate widely, from under two dollars a gallon to over four dollars at times. But for the past year or so, gas prices have held at or just over two dollars a gallon, crude oil at 40 to 50 dollars. According to Harry Cooney, energy risk management expert with GrowMark, the reason for low, stable prices has been a huge increase in domestic production in recent years.




Cooney says production has risen so rapidly that the U.S. has achieved the long sought goal of self-sufficiency in oil production.



But even though we no longer have to rely on imports from unstable regions of the world, prices will still fluctuate. There is a cost of extraction, and when prices fall too low, domestic production starts to decline. Cooney expects some increase in the price of crude oil over the next year.


But a rise from 40 to 60 dollars a barrel is a far cry from the 100 dollar plus prices oil occasionally peaked at prior to the massive increase in domestic production. Fuel price and supply stability is an important factor in maintaining a stable and growing economy. . 

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