The U.S. is the world's leading oil producer. So why are gas prices soaring?

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Motorists are paying sharply higher substance prices since the outbreak of the Iran war, contempt the U.S. being the world's largest lipid producer. Why?

After all, arsenic of 2023 (the latest information available), the U.S. churned retired astir 13 cardinal barrels of crude a day, according to the Energy Information Administration (EIA). That compares with astir 10 cardinal barrels from the world's No. 2 and No. 3 producers, Russia and Saudi Arabia.

On Tuesday, the mean nationalist state terms successful the U.S. roseate to $3.79 a gallon, up from $2.92 a period ago, according to AAA. A gallon of diesel costs has shot up to much than $5, the highest level since precocious 2022.

Interconnected lipid markets

And here's the thing: The U.S. exports overmuch of the lipid it produces, selling it to overseas purchasers. We besides stay a large importer, with the U.S besides the world's biggest idiosyncratic of oil, data shows.

"The planetary marketplace sets the price. The provenance of the lipid we're filling retired state tanks with doesn't matter," said Bernard Yaros, pb U.S. economist astatine Oxford Economics.

The U.S. exports astir 11 cardinal barrels of its regular output, according to the EIA. It besides imports astir 8 cardinal barrels of oil.

Much of the lipid produced successful the U.S. is known arsenic "light" crude, the highest-quality lipid and the 1 for which determination is the top planetary demand. Yet astir of the country's refining capableness is optimized for a much viscous benignant of lipid known arsenic "heavy" crude. U.S. refineries can't beryllium rapidly oregon easy reconfigured to grip lighter and low-sulfur, oregon "sweet," grades of oil, explained Ernest Moniz, the erstwhile U.S. Secretary of Energy nether President Obama and present an vigor researcher astatine MIT.

"Oil from antithetic places has antithetic characteristics," Willy Shih, a supply-chain adept and prof astatine Harvard Business School, told CBS News. "Refineries successful the U.S., on the Gulf Coast successful Texas, are geared toward handling a peculiar benignant of crude lipid from Venezuela," helium said.

The upshot: When drivers capable up their cars, it's often with state produced utilizing imported lipid that was refined domestically. So erstwhile lipid prices emergence astir the world, that besides increases the outgo of substance successful the U.S.

Meanwhile, surging lipid prices aren't lone raising the outgo of filling a car — it's besides boosting the outgo of filling a level with pitchy fuel. That, successful turn, is starring airlines to lift their fares.

A caller investigation of U.S. hose summons prices by Deutsche Bank analysts recovered that mean home airfares for travelers booking flights aboriginal successful March person climbed by betwixt 15% and 124%. The mean fare for transcontinental flights has jumped implicit 100%, portion formation prices to the Caribbean, Florida and transatlantic destinations person besides risen, according to the concern bank.

"If the terms of lipid goes up, the terms of everything goes up," Ernest Moniz, an vigor researcher astatine MIT and the erstwhile U.S. Secretary of Energy nether President Obama, told CBS News. "Even though we are a nett exporter of oil, that doesn't alteration the information that we are a large importer arsenic well."

Edited by Alain Sherter

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