For most of us, the only time we focus on oil prices comes when we need to fill our gas tanks. Over the last century, retail gasoline prices in the United States started around 25 cents a gallon many years ago and then became volatile amidst the various wars and embargoes that began in the early 1970s. When adjusted for inflation, however, gasoline price have usually been in a range of $2 to $3 a gallon with an occasional excursion above $4. In the U.S., prices are low as compared to Europe where higher taxes have consumers paying around $6.50 to $7.50 a gallon.

In the last few years, America has had relatively low gasoline prices, but in recent months they have been rising rather sharply.  In April of last year, the average U.S. retail price for regular was about $2.40 a gallon; it is now about $2.76 with 16 cents of the increase coming in the last month.

Last week, President Trump realized that increasing gasoline prices were destroying some benefits his recent “tax cut” was supposed to give American consumers and took to Twitter to denounce OPEC’s role in forcing up prices. “Looks like OPEC is at it again,” he said in his Twitter post. “with record amounts of oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”

As numerous observers noted, however, the world no longer has a crude oil glut and, given the uncertainties surrounding the Iranian nuclear deal, the Korean situation, and the trade war with China, the price of crude (and therefore gasoline) has been moving up steadily in recent weeks.

While the world’s oil supply situation is a complicated subject with many factors from supply and demand, through global warming and dirty air, to geopolitical upheavals affecting our gasoline prices, there are a few underlying facts. The world’s supply of fossil fuels, (coal, oil, and natural gas) is finite. We extract and use the cheapest fuels first and then dig deeper and only go after the more costly ways to extract oil as selling prices move higher.

The last decade has seen several examples of how the laws of geology and economics have affected oil production and prices. Twenty years ago, some foresaw that the supply of cheap oil which had been selling for $20 to $40 a barrel was coming to an end. This insight was correct for the price of oil skyrocketed from below $20 a barrel in the late 1980s to a peak of $140 a barrel in 2008. U.S. gasoline prices climbed to an average of $4.11 a gallon and $4.67 in California.

The impact of much higher gasoline prices has never been well understood because in 2008 very high gasoline prices were wrapped up with a mortgage crisis, insolvent banks, and the near collapse of the U.S. automobile industry. These economic misfortunes resulted in the great recession of 2008 and sent oil prices down by more than $100 a barrel and reduced the global demand for oil products considerably.

Thanks to ever-growing demand for oil from China and other rapidly growing economies, however, oil prices quickly rebounded to a range of $80 to $110 a barrel where they stayed until mid-2014.  In the meantime, a new source of oil emerged — shale oil. Although this technology had been known for many years, high prices combined with new production techniques soon led to an unprecedented surge in U.S. oil production. A combination of the right geology in the mid-western U.S. and the new American system of producing oil soon led to an increase of nearly 5 million barrels per day of U.S. oil production.

The sudden surge in U.S. oil production, combined with the lifting of U.S. export restrictions, soon led to a glut of crude on the world markets. By early 2016, world oil prices had fallen from around $110 a barrel to $30. This, in turn, led not only to the relatively low oil prices we have had in recent years, but also set the stage for likely troubles in the decade ahead. The low prices resulted in a dramatic drop in expenditures for finding and developing new sources of oil around the world so for the first time we are now consuming billions of barrels more oil each year than we are finding. The world now consumes about 35 billion barrels of oil a year and this number is increasing at a rate of over 500 million barrels each year.

Unless there are significant geopolitical or economic disruptions, the global oil industry has got to come up with an additional 500 million barrels in each of the foreseeable years or we are going to have shortages and higher prices.

All this leads up to the current question of where the global supply of oil and oil prices are going.  The sudden increase of circa 5 million barrels per day U.S. shale oil production put the notion that oil supplies are limited on the back burner — at least for the time being. While conventional oil production peaked about 10 years ago more or less on schedule, the rapid increase of shale oil prevented the economic disaster that would befall the world if oil supplies run short.

For the immediate future, there does not seem to be enough capital investment taking place to develop enough new sources of conventional oil. Conventional oil fields normally deplete at around six percent each year so that unless new wells are drilled to offset this decline, production will drop.

For now, the future of the world’s oil supply seems to be dependent on the U.S. shale oil industry. Our government, the International Energy Agency and the oil industry keeps saying that there is plenty of shale oil in the U.S. to keep production growing rapidly for years. However, there are independent geologists who take a more pessimistic view that there is not enough shale oil left that can be produced at an affordable cost. In recent months the stories of troubles that might hamper continued rapid growth of U.S. shale oil production have been emerging from the shale basins.

While there is not yet enough evidence to say whether the world’s oil supply will become considerably tighter in the next few years, it is well worth watching. In the meantime, you can keep an eye on what you are paying at the gas pump as a clue to what is going on.