what's driving gasoline prices?

May 25, 2007

Prices at the pump have gone up lately, and many Americans are wondering why.

Growing demand worldwide for transportation fuels is the biggest factor. U.S. demand has risen since last year and now totals about 400 million gallons of gasoline a day. To meet this need, U.S. year-to-date gasoline production is the highest ever. This has occurred while U.S. refinery capacity was temporarily reduced this spring for needed repairs and upkeep.

Crude oil prices, which account for about half the price Americans pay at the pump, are also a factor. From mid- January to late April, crude prices rose 25 percent as the international market responded to rising worldwide demand and continuing concerns regarding instability in many oil producing countries.

Imports are also important, accounting for about 10 percent of Americans' gasoline needs. But recent labor strikes and refinery upkeep in Europe and elsewhere have reduced the availability of imports.

These are just some of the factors pushing pump prices up. But what is being done to help drive them down?

At ExxonMobil, our U.S. gasoline production is higher this year than last. Despite the costs associated with complying with government clean air and clean fuel regulations, we have expanded our U.S. refinery capacity at a rate that is 50 percent greater than the industry rate over the last decade.

We are also investing at record levels to increase energy supplies. Last year, we invested over $20 billion, and over the last twenty years, we have invested more than we've earned.

These investments benefit Americans over the long term. So can sound energy policies, such as promoting energy efficiency, easing restrictions on U.S. oil and gas resources that are currently off-limits, and encouraging more supplies from more countries.

What about price control legislation that Congress is considering? History shows it can backfire. When governments imposed price controls in the 1970s to keep prices artificially low, the results were lower domestic production, higher demand, increased imports — and long lines at the pump. At ExxonMobil, we're committed to pricing responsibly today and investing for the future. But we all need to use energy more efficiently, and sound policy decisions that recognize today's energy challenges are needed. This will ensure that Americans can enjoy reliable and affordable fuel supplies, far into the future.