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Source: Wikimedia Commons; West Texas pumpjack. 

Oil is everywhere. It's in the car you drive, sure, but it's also in the electricity you use, the computer you stare at, and even the burger you just bought. With oil production and prices moving at record rates, oil ain't what it used to be -- and certainly not for America. Here are five fascinating facts you need to know about oil.

1. U.S. oil production is soaring
America is oozing oil at record rates. Domestic production is soaring, reaching nearly 270 million barrels in September. While this is the highest production level since 1986, the more fascinating metric is the rate at which production has surpassed previous numbers. U.S. oil production jumped from 5.6 million barrels per day, or bpd, in 2011 to 7.4 million bpd in 2013 -- a massive 32% jump in two years.

US Crude Oil Production Chart

U.S. Crude Oil Production data by YCharts

2. Oil prices are at a four-year low  -- and dropping fast
Oil prices are erratic. But there's no denying that oil prices have been spiraling downwards since June. At $77 per barrel, oil hasn't been this cheap since late 2010. The reason is we've simply got more supply than demand. As OPEC has kept oil gushing, the U.S. has ballooned production to its highest level since 1986. And with a struggling European economy and a slowing one in Asia, there's no sign of a significant bounce back anytime soon.

Brent Crude Oil Spot Price Chart

Brent data by YCharts

3. The average American household spent $2,600 on gasoline in 2013
Forget worldwide oil prices -- Americans still spend a significant portion of their profits at the pump. With a median income of $51,900, that means the average American household doles out a whopping 5% of their hard-earned dollars on gasoline. That statistic has helped fuel a fierce debate on gas taxes and subsidies. If we tax gas, poorer Americans will be forced to spend an even larger portion of their income at the pump. But if we subsidize gasoline, we're using taxpayer money that could be going to other causes.

4. U.S. oil prices don't affect gas prices as much as worldwide gas prices 
But even as American oil expands, don't expect a direct impact on pump prices. In 2011, something unprecedented occurred. With much of the global economy in turmoil, West Texas Intermediate, or WTI, oil prices, the long-standing benchmark for U.S. oil prices, veered off from Brent oil prices, the accepted global oil price benchmark. But U.S. gas prices didn't follow. The chart below shows how Brent maintained its status as a steady benchmark, keeping an approximately $0.90 spread between Brent crude oil prices and U.S. gas prices. Meanwhile, WTI prices made an erratic jump in 2011, veering off from its previously predictable spread.

This divergence caused analysts to realize that U.S. gas prices are more connected to international oil prices than expected.

Brent Vs Wti

Source: U.S. Energy Information Administration. 

That means global demand plays a larger and more direct role than ever before in American gas prices. With U.S. oil consumption down around 9% over the last decade, oil prices aren't under America's auspices anymore.

5. Oil demand from emerging markets is the real mover and shaker
Whether U.S. production stays local or goes global, booming energy demand from emerging markets will be the main push behind pump prices. As the International Energy Agency puts it:

In the next five years, almost half of global oil demand growth will come from China, and this trend is set to continue to 2035, as oil demand from the transportation sector is growing strongly in countries such as China and India.

But not all emerging markets are ready to eat up oil. This past Tuesday, Indonesian President Joko Widodo jumped on the cheap oil opportunity to eliminate all of Indonesia's gasoline and diesel subsidies. Prices soared up to 30%, but estimates suggest the country will free up around $20 billion a year to spend on other productive purposes.

Oil is awkward
From Indonesia to America, oil is awkward. Analysts are often wrong just as much as they're right, and what we think we know today can change tomorrow. Prices and production are erratic, and growing global demand takes any illusion of control out of America's hands. These facts will help ground your own observations, but they're no replacement for a constant eye on energy.

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