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DALLAS (AP) — America’s rediscovered prowess in oil production is shaking up old notions about the impact of higher crude prices on the U.S. economy.
It has long been conventional wisdom that rising oil prices hurt the economy by forcing consumers to spend more on gasoline and heating their homes, leaving less for other things.
Presumably that kind of run-up would slow the U.S. economy. Instead, the economy grew at its fastest rate in nearly four years during the April-through-June quarter.
President Donald Trump appears plainly worried about rising oil prices just a few weeks before midterm elections that will decide which party controls the House and Senate.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!” Trump tweeted on Thursday. “We will remember. The OPEC monopoly must get prices down now!”
Members of the Organization of the Petroleum Exporting Countries, who account for about one-third of global oil supplies, are scheduled to meet this weekend with non-members including Russia.
The gathering was not expected to yield any big decisions. Those typically come at major OPEC meetings like the one set for December. Oil markets, however, were roiled Friday by a report that attendees were considering a significant increase in production to offset declining output from Iran, where exports have fallen ahead of Trump’s reimposition of sanctions.
OPEC and Russia have capped production since January 2017 to bolster prices. Output fell even below those targets this year, and in June the same countries agreed to boost the oil supply, although they didn’t give numbers.
Oil prices are up roughly 40 percent in the past year. On Friday, benchmark U.S. crude was trading around $71 a barrel, and the international standard, Brent, was closing in on $80.
The national average price for gasoline stood at $2.85 per gallon, up 10 percent from a year ago, according to auto club AAA. That increase likely would be greater were it not for a slump in gasoline demand that is typical for this time of year, when summer vacations are over.
The United States still imports about 6 million barrels of oil a day on average, but that is down from more than 10 million a decade ago. In the same period, U.S. production has doubled to more than 10 million barrels a day, according to government figures.
“Because the U.S. now is producing so much more than it used to, (the rise in oil prices) is not as big an impact as it would have been 20 years ago or 10 years ago,” said Michael Maher, an energy researcher at Rice University and a former Exxon Mobil economist.
The weakening link between oil and the overall economy was seen — in reverse — just three years ago. Then, plunging oil prices were expected to boost the economy by leaving more money in consumers’ pocket, yet GDP growth slowed at the same time that lower oil prices took hold during 2015.
Other economists caution against minimizing the disruption caused by energy prices.
“Higher oil prices are unambiguously bad for the U.S. economy,” said Philip Verleger, an economist who has studied energy markets. “They force consumers to divert their income from spending on other items to spending on fuels.”
Since energy amounts to only about 3 percent of consumer spending, a cutback in that other 97 percent “causes losses for those who sell autos, restaurants, airlines, resorts and all parts of the economy,” Verleger said.
When oil prices tumbled starting in mid-2014, U.S. energy producers cut back on drilling.
They cut thousands of jobs and they spent less on rigs, steel pipes and railcars to ship crude to refineries. That softened the bounce that economists expected to see from cheaper oil.
Now, with oil prices rising, energy companies are boosting production, creating an economic stimulus that offsets some of the blow from higher prices on consumers. Oil- and gas-related investment accounted for about 40 percent of the growth in business investment in the April-June quarter this year. The number of active oil-drilling rigs is near a three-year high, although not back to levels seen before the 2014 oil-price crash.
Moody’s Analytics estimates that every penny increase at the pump reduces consumer spending by $1 billion over a year, and gasoline has jumped 24 cents in the past year, according to AAA. That is “a clear-cut negative,” but not deeply damaging, said Ryan Sweet, director of real-time economics at Moody’s.
“Usually with gasoline prices, speed kills — a gradual increase (like the current one), consumers can absorb that,” Sweet said. Consumers have other factors in their favor, he added, including a tight job market, wage growth, better household balance sheets, and the recent tax cut.
Sweet said the boon that higher prices represent to the growing energy sector, which can invest in more wells, equipment and hiring, means that the run-up in crude has probably been “a small but net positive” for the economy.
“That could change if we get up to $3.50, $4,” he said.

The Danos Foundation and Shell Exploration and Production Co. distributed 48 generators to 42 nonprofit organizations from Lafourche, Orleans, St. Mary and Terrebonne parishes at Danos headquarters in Gray on Sept. 18. Additional generators will be donated to the Governor’s Office of Homeland Security and Emergency Preparedness for distribution as needed during emergency response activities.

Following a three hour and 19 minute lightning delay, the No. 18 Nicholls State University football team picked up a 27-7 victory against No. 11 Sam Houston State Saturday night in the Colonels’ home opener at Manning Field at John L. Guidry Stadium.
Nicholls (2-2, 1-1 SLC) trailed 7-3 after the first quarter but went on to shut down the Bearkats (1-2, 0-1 SLC) the rest of the way.
Offensively, the Colonels grinded it out with their rushing attack, totaling 248 yards on 54 carries.
Sam Houston, which had won the last 11 meetings against Nicholls dating back to 2005, couldn’t get its ground game going, rushing for 53 yards on 30 totes.
Nicholls quarterback Chase Fourcade completed 15 of 23 passes for 197 and a touchdown. His touchdown toss came in the second quarter to Damion Jeanpiere Jr., who moved into fifth place in all-time receiving yards. The high school teammates connected on a 12-yard slant right before halftime that put Nicholls ahead 10-7.
In the second half, Lorran Fonseca added a field goal for a 13-7 advantage.
Before the end of the quarter, the Bearkats pieced together a 10-play drive that went for 86 yards, but Ahmani Martin made the play of the game with a timely interception. Through three games, Nicholls had not recorded a pick before Darren Evans secured one earlier in the quarter.
Then on 2nd-and-goal from the 3, Bearkat quarterback Mike Dare threw a pass on an out route near the goal line, and Martin dove in front of the receiver and snagged the pick at the 1.
Fourcade then led Nicholls on a touchdown drive, helped by his 24-yard scamper down the sideline. The drive ended on a Dontrell Taylor 6-yard touchdown run for a 20-7 advantage. Taylor (68 yards rushing), Kyran Irvin (73 yards) and Kendall Bussey (46 yards) each had at least 13 carries. Fourcade added 60 yards on the ground to give Nicholls a 4.6 average in the win.
The game’s final touchdown was by Bussey on a 2-yard rush. It was set up via a fourth-down try from Sam Houston at their own 2.
Evan Veron, who matched his career best with two sacks, earned his second to force a 4th-and-16 from the Bearkat 2.
With only 2:55 remaining in the contest, the Kats threw a ball down the middle with hopes of extending the possession, but Martin broke it up to force the turnover-on-downs. Bussey scored his first touchdown in Thibodaux on the next play, making the final 27-7.
Veron and Kenny Dotson led the Colonels with two sacks each. Laryon James finished with a career-high 11 tackles, while Ronald Ollie added two tackles for loss with a sack.
Dai’Jean Dixon led the receivers with 62 yards on three catches, and Arron McKenney caught his first three career passes, going for 51 yards. McKenney had a highlight catch for 22 yards in the third quarter, but the drive stalled inside the 10 after a fumble by Bussey at the Bearkat 11 — one of the few Colonel mistakes.
The specialists had one, too, with a blocked field goal, but Fonseca was good from 35 and 22 yards.
Joel Dullary set the night’s tone with a 37-yard kick return to start the game.
Winston Jones only punted twice, but both were downed inside the 10.
Dare finished 18 of 24 for 214 yards and had a touchdown pass to Davion Davis. Nathan Stewart led all players with 113 yards on eight receptions.
Nicholls junior Stefano Guarisco and redshirt junior Garret LeBlanc, both Central Catholic alums, each played in the contest.
UP NEXT
Nicholls will play at home again Sept. 29 for Family Day. Kickoff against Lamar is scheduled for 2:30 p.m., and the game will air on Eleven Sports.