Record U.S. Oil Production Assures Low Gas Prices Through 2016

"Total U.S. crude oil production is expected to average 9.4 million barrels a day this year and 9.3 million barrels a day for 2016, the EIA report said," writes Rick Jervis of USA Today on the outlook. "Those are higher estimates than the EIA released last month."

What's remarkable about the record output—"highest for any month since 1972", is that it is occurring after a huge drop in oil prices.

The price for a barrel of West Texas Intermediate crude has ricocheted from more than $100 last summer to $40 in January to $60 this week [and forecasted] to average $55 a barrel this year and $62 a barrel in 2016, according to the report.

"The numbers run counter to conventional thinking that lower oil prices would severely drive down U.S. production," writes Jervis. In fact, energy companies are reducing drilling - fewer rigs are in service, but they've become more efficient and productive with the remaining ones.

One result of the record crude production is that gasoline prices will remain relatively low through 2016. "The EIA expects monthly average gasoline prices to decline the rest of the year, averaging $2.43 a gallon during the second half of 2015," writes Jervis. According to the AAA, gas prices average $2.78 on June 12.