Texas oil production hit another record in March....so why do gas prices keep rising?
The Energy Information Agency says Texas production, mainly from the Permian Basin and Eagle Ford Shale Fields, jumped to a record 3.06 million barrels a day in March, spurred on not just by rising gas prices but by prices holding relatively steady in the low to mid $60.
While rising oil prices are good for producers, a steady price allows corporations the leeway to make necessary investments.But at the same time, the price of gas at the pump in San Antonio jumped again, and is now up to an average of $2.30.
So what gives?
"Well, its because oil is a global commodity," Patrick DeHaan, chief oil analyst at GasBuddy.com tells News Radio 1200 WOAI. "The big story here is that OPEC cut oil production by more than the U.S. has increased production."
Despite record high Texas and national oil output, the United States as a whole recently pushed through the previous record for oil production set in 1970 and is now producing 10.5 million barrels a day. But the U.S. is still far from oil independent, with the U.S. using some 18 million barrels a day.
Several factors affect the price we pay for gasoline. Now that exports of U.S. produced crude oil are legal, some Eagle Ford crude is being exported. Demand is also high due to the strong economy, and the resurgence in popularity of large SUVs.
And DeHaan says one big prop has been kicked out of the world energy supply.
"Venezuela is producing the least amount of crude oil in the past thirty years," he said. "That is monumental, when you consider Venezuela's previous large amount of production."
Venezuela is in the midst of a self-made financial crisis, brought on by incompetent national leadership.
DeHaan says the rising gas prices are largely due to the ability of OPEC to enforce the steep production cuts which were approved in 2017 as a way to raise global oil prices. But he says with prices stabilizing in the $65 range, it may become more attractive for some of OPEC's more vulnerable members, like Nigeria and Iraq, to 'cheat' on those production limits in hopes of reaping easy money. Most OPEC nations have no other means of international income other than oil exports.
"I think countries do understand that the cuts are in their best interests," he said. "But as prices get up into the mid $60s, it may become more of an opportunity to cheat."
So how high will gas prices go? DeHaan says some parts of the country could be paying $4 or more by Memorial Day. Parts of California could hit $4.50, thanks to a hefty new gas tax imposed by the state's Democrat leadership.
"For San Antonio, I don't think the average price will eclipse $2.50," he said. "So San Antonio will avoid much of the pain that will be seen in the rest of the country."