So why hasn’t more domestic production of oil led to less domestic spending on oil? The main reason for this is simple: oil is priced according to a global market, not a U.S. market. While we are producing more at home, and even recently became the second largest oil producer in the world behind Saudi Arabia, all of our oil is part of the global market, where prices are determined by global supply and demand factors. Everything from supply disruptions caused by instability to booming economic growth in China or India affect prices. Recently, the tensions between Russia and Ukraine and the renewed violence in Libya have pushed prices upward.
Does this mean that American drivers are simply out of luck and forced to pay high gasoline prices based on the global rate for oil? Yes and no. It is true that Americans will not see relief at the pump as long as global oil prices remain high, which they have despite the huge increase in U.S. oil production. However, as more drivers are finding out every day, there are growing opportunities to “opt out” of the global oil market altogether.
While America’s transportation sector currently relies on oil for 92 percent of its fuel, more vehicles powered by electricity and natural gas are available to American drivers than ever before. To date, nearly 200,000 electric vehicles and over 125,000 vehicles powered by natural gas are on America’s roadways. In addition to receiving rave consumer reviews, these vehicles are the single best way to diversify the transportation sector and give American drivers the opportunity to choose a less expensive fuel instead of being forced to make $100 stops at the gas station.
However, our nation is not investing enough in the research and development needed to make these technologies even better and more affordable. The most recent Quadrennial Technology Review found that the Department of Energy is “underinvested in the transportation sector. Yet, reliance on oil is the greatest immediate threat to U.S. economic and national security.” The current investment is less than half the level of the 1970s (adjusted for inflation), and is less than that being made by our competitors in Europe and Asia.
Americans get to choose where they want to travel this summer, and it’s only right that they get to choose the fuel they use to get there as well. While the domestic oil boom, which should be encouraged and expanded, won’t bring relief at the pump, accelerating the development of alternative fuel technologies will allow Americans to approach every driving season with confidence that high gas prices won’t ruin all the fun.