While U.S. may boost oil production, prices for crude will stay high

Though we may have more domestic oil in the coming years, be prepared to stay comfy with high gas prices. (Kimberly Elsham/MEDILL)

The U.S. may be less dependent on foreign oil in the future, but that doesn’t mean prices at the gas pump are heading down in the near future.

The U.S. Energy Information Administration boosted its outlook Monday for domestic oil production through 2020. According to the department’s Annual Energy Outlook 2012, the U.S. will be producing 6.7 million barrels of crude oil each day by 2020, up 11 percent from 2010’s 5.5 million barrels.  Greater production of biofuels and weaker demand for transportation fuels are also expected to ease America’s dependence on foreign oil.

Anyone who’s taken Economics 101 will tell you that a product’s price goes down as the supply increases — even moreso if demand’s down, too. Sometimes, though, politics can get in the way.

Industry analysts point out that growing tensions with Iran over its nuclear capabilities, including the European Union’s announcement Monday that it will ban Iran’s oil imports beginning in July, have been helping to keep oil prices high.

Oil’s been kicking around the $100-per-barrel price since November, and that may continue for awhile. Industry experts speculate that this summer’s EPA regulation-tightening will force some East Coast refineries to shutter, possibly driving prices up even farther.

How will all of this play out at the gas pump? Political and regulatory factors are in the driver’s seat for now, and until that changes, consumers will have to pay up. Tuesday’s national average gas price was $3.38 a gallon, according to AAA.

NYMEX crude oil futures were trending down at the closing bell Tuesday, with the March contract down 63 cents to $98.95 a barrel.

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