Supply and demand concerning a commodity such as oil is sometimes misunderstood. Most folks understand that when supply goes down price goes up and so forth, but gasoline is a very inelastic commodity. The supply and demand curve are very similar and the smallest change in demand or a "perceived" change in supply can effect price. I'm no expert, but the recent gas price hike to over $4 per gallon in KY was a result of a perceived change in supply. Even though there was unrest in the middle east, production stayed roughly the same, but that didn't stop the prices from going up due to perception.
Anyway, here is a good article indicating what to expect gas prices to do if production does in fact go up.