FACT: U.S. Drilling Doesn't Lower Gas Prices
Posted March 21, 2012 in Moving Beyond Oil
The ‘drill, baby, drill’ approach to energy won’t ease your pain at the pump according to an analysis by the Associated Press. In an article running in papers across the country, AP puts it simply: “…more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.”
The AP’s findings are not surprising. Gasoline prices are subject to the global oil market that U.S. producers cannot control. Changes in the price at the pump do not follow U.S. oil supply trends.
The AP compared inflation-adjusted gas prices to U.S. oil production from 1976 to the present and found no correlation between them. If they were connected one would expect a consistent trend where gas prices eased as production from drilling increased. But AP’s statistical analysis did not bear this out. Multiple statisticians and economists consulted by AP for verification of their analysis also agreed with the findings.
In a recent speech, Senator Jeff Bingaman also pointed out the lack of a relationship between U.S. oil production and gas prices using the chart below.
Senator Bingaman: “Here, the red line is the change in domestic production, year over year. The blue line is gasoline prices. And what’s striking about this chart is the lack of relationship between the two lines. Even with U.S. production increasing as it was at some points, oil prices were also increasing, and gas prices were also increasing.”
Many pundits choose to ignore the facts and play a gas price blame game that focuses on drilling everywhere and expanding polluting tar sands from Canada. These wrong-headed prescriptions only serve to confuse an already frustrated public. The only guaranteed way to lower consumers’ fuel bills is to provide ways to use less gasoline.
We have clean energy strategies that can move us beyond oil and loosen oil's grip on our economy. Using known and cost-effective technologies and measures we can provide more choices of fuel-efficient vehicles, cleaner and cheaper non-petroleum fuels and alternatives to driving alone. Recent improvements in federal automobile standards are already bolstering a rise in the average fuel economy of new cars and trucks.
Recently proposed auto standards to reach the equivalent of 54.5 mpg by 2025 will save the average driver $4,400 over the life of their vehicle due to fewer trips to the gas pump.
Improved fuel efficiency and other clean energy solutions are what policymakers should be supporting. The facts don’t support more U.S. drilling as a solution to high gas prices. It’s good to see AP set the story straight. The public needs the facts and clean energy solutions. As history shows, we’ve drilled and drilled and it doesn’t help your wallet.
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Comments
lincoln may — Mar 21 2012 06:50 PM
Adam Smith is rolling over in his grave. Of course prices are impacted by supply and demand. But you cannot compare US production to costs. US production is a very small piece of the global production and a small piece of US consumption. If we increased drilling and US supply approached demand, the price would correlate (assuming we kept the oil in the US and didn't sell it to a higher bidder)
Tom — Mar 21 2012 08:33 PM
What a purile argument. The writer doesn't consider (or conveniently ignores) other market forces in his analysis. As for the "Facts" - the ones the writer presents nicely support his green energy agenda but they're not entirely correct. Notice that US oil production on the graph has hardly varied over most of the 20 years. Yes we need to continue pursuing energy efficiency. Yes, we need to pursue alternative sources of energy. But of course none are commercially viable - YET. All you will accomplish with this Green fantasy is the loss of many American jobs and a reduction in our standard of living. Instead of wasting money subsidizing green energy that isn't ready, why not use all that money for more research so we can get there faster?
Bioblogger — Mar 23 2012 10:36 AM
It is important to note that this is not just a Democratic opinion. Pres. Reagan's National Security Advisor Bud McFarlane (1983-85) in an article in the Wall Street Journal agrees that, because the price of oil is globally fungible, increased domestic drilling would not substantially affect the price we will pay at the pump http://on.wsj.com/GRvTDf . By the time it entered market the accelerating global demand, particularly in Asia, will negate its impact anyway. "Drill Baby Drill" as a prescription to solving our oil addiction (Bush's characterization) is like giving fresh heroin to an addict. We need alternatives at the pump and we need flex-fuel cars that can run on them.
Ellie Oop — Mar 23 2012 12:54 PM
It seems apparent that the oil prices are up to supply more to the greedy -- such as BP who is
facing a huge lawsuit. Somebody ahs to pay, right?
Kenneth L. Wolf — Mar 23 2012 04:56 PM
The exorbitantly high cost of living, including fuel prices, is the result of out of control runaway capitalist greed, introduced by the industrial right wing ruling class "elite". It's nothing other than that, and there is nothing new about it.
Andrew Grosd — Mar 24 2012 07:30 PM
Our CARB & EPA lab certified 30% fuel economy improvement solution may become standard on 2014 MY new light and medium duty trucks.
Enough Is-enough — Mar 30 2012 05:22 AM
WE NEED 5 MILLION PEOPLE TO BOYCOTT ALL GAS STATIONS ON FRIDAY -JUNE 1ST 2012. THE GAS COMPANIES SAY THAT WE WONT BE ABLE TO DO THIS AND THAT IN FACT THIS WILL NEVER WORK BECAUSE IT HASNT IN THE PAST. ADD AS FRIEND AND LETS CRIPPLE THE OIL COMPANIES ON THIS DAY. GAS PRICES ARE GETTING OUT OF HAND. LETS MAKE A STAND. TOGETHER WE CAN AND WILL MAKE A DIFFERENCE. WE HAVE HAD ENOUGH ALREADY . Please send friend request to Enough is-enough on facebook to be added to this event