36 years of analysis shows domestic drilling doesn't lower gas prices.

fletcher

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Problem? :trollol:

FACT CHECK: More US Drilling Didn't Drop Gas Price

By JACK GILLUM and SETH BORENSTEIN Associated Press
WASHINGTON March 21, 2012 (AP)

It's the political cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.

A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.

If more domestic oil drilling worked as politicians say, you'd now be paying about $2 a gallon for gasoline. Instead, you're paying the highest prices ever for March.

Political rhetoric about the blame over gas prices and the power to change them — whether Republican claims now or Democrats' charges four years ago — is not supported by cold, hard figures. And that's especially true about oil drilling in the U.S. More oil production in the United States does not mean consistently lower prices at the pump.

Sometimes prices increase as American drilling ramps up. That's what has happened in the past three years. Since February 2009, U.S. oil production has increased 15 percent when seasonally adjusted. Prices in those three years went from $2.07 per gallon to $3.58. It was a case of drilling more and paying much more.
Lots more in the Link.
 

Party Rooster

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But it does create jobs and investment in this country. And less that goes into the pockets of savages is always a good thing.
 

MayrMeninoCrash

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Lining up Wall Street speculators along a wall and putting bullets in their heads will drop the price.
 

whiskeyguy

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Also simple drilling is not the only thing necessary to lower the price. The cost of doing business in America is constantly rising, especially with increased regulations. In very simple macroeconomic terms, more oil = cheaper gas... which is true even if gas prices rise. For example, if we did absolutely no drilling in America, gas prices would be higher then they are right now... so even if it doesn't lower gas prices, it will at least help limit increases in price.
 

MayrMeninoCrash

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Also simple drilling is not the only thing necessary to lower the price. The cost of doing business in America is constantly rising, especially with increased regulations. In very simple macroeconomic terms, more oil = cheaper gas... which is true even if gas prices rise. For example, if we did absolutely no drilling in America, gas prices would be higher then they are right now... so even if it doesn't lower gas prices, it will at least help limit increases in price.
Maybe, maybe not. World oil prices aren't set by the local Chevron station. Your example is only true because the US contributes a significant amount to the world's oil supply, so any disruption of that would be felt, not because there's some great savings to using a barrel of Texas oil versus Saudi oil.
 

whiskeyguy

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Maybe, maybe not. World oil prices aren't set by the local Chevron station. Your example is only true because the US contributes a significant amount to the world's oil supply, so any disruption of that would be felt, not because there's some great savings to using a barrel of Texas oil versus Saudi oil.
Oh yeah, I wasn't saying that oil from Texas is absolutely sold in the US, or that if it were would be especially cheaper. Like I said, on a simple macroeconomic scale, less oil in the world = higher gas prices. Oil in America is often more expensive to produce than oil in other areas of the globe, but producing it creates more supply and thus reduces the cost, again in very simple terms. Also like OAPC pointed out, it creates jobs/investments in America which reduces the impact high oil prices have on citizens, again in simple terms.
 

MayrMeninoCrash

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Oh yeah, I wasn't saying that oil from Texas is absolutely sold in the US, or that if it were would be especially cheaper. Like I said, on a simple macroeconomic scale, less oil in the world = higher gas prices. Oil in America is often more expensive to produce than oil in other areas of the globe, but producing it creates more supply and thus reduces the cost, again in very simple terms. Also like OAPC pointed out, it creates jobs/investments in America which reduces the impact high oil prices have on citizens, again in simple terms.
OK, I thought you were arguing that US oil is "cheaper" because it doesn't have to be put into a supertanker and shipped around the Strait of Hormuz.
 

fletcher

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Oh yeah, I wasn't saying that oil from Texas is absolutely sold in the US, or that if it were would be especially cheaper. Like I said, on a simple macroeconomic scale, less oil in the world = higher gas prices. Oil in America is often more expensive to produce than oil in other areas of the globe, but producing it creates more supply and thus reduces the cost, again in very simple terms. Also like OAPC pointed out, it creates jobs/investments in America which reduces the impact high oil prices have on citizens, again in simple terms.
That statement contradicts itself, if it costs more to refine its going to raise the cost no matter how large the supply is.
 

MayrMeninoCrash

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That statement contradicts itself, if it costs more to refine its going to raise the cost no matter how large the supply is.
Refiners still have to buy the crude oil, no? The less they have to pay for crude, the less they can charge for their final product.
 

fletcher

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Refiners still have to buy the crude oil, no? The less they have to pay for crude, the less they can charge for their final product.
Price of crude ≠ price at the pump.

With that argument more drilling here would lower the price of refined gasoline but from the article that isnt the case.
 

VMS

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1.) Of course not. The non-US supply of oil is (badly) controlled by the OPEC cartel. In reality, we're just talking about a moderate increase in crude supply but a large increase in American crude supply. It's about increasing our market share in a relatively fixed market.

2.) About that relatively fixed market: it's OIL. Demand simply increases. Unless we buy off the Saudis (I still think that's what the '91 Gulf War was, above and beyond the only time post-Cold War the UN has actually done what it was created to do), prices simply don't go down. "Relatively" is very, very relative in this case.

One way or the other, the oil is going to get pumped out of the ground, it's going to get refined, and it's going to go into the gas tank of something or the other. Maintaining a strategic reserve for the US makes sense, but in the end it's also money sitting in the ground: get it out of the ground and let's cash it in for fuck's sake.

And Voss' Tumor correct me if I'm wrong, but much of that Mexican refined usage is Mexican crude that's shipped to the US and then shipped back to Mexico. It's a contracted portion of US refining capacity. For fuck's sake: it's something the US actually sells to Mexico. Don't fuck with it.
 

MayrMeninoCrash

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Price of crude ≠ price at the pump.

With that argument more drilling here would lower the price of refined gasoline but from the article that isnt the case.
The price of crude is independent of how much crude the US actually pumps. It is set by the world market. It is not a pure supply-demand relationship. More pumping here wouldn't do a damn thing to gas prices if China is willing to pay $150 a barrel for oil.
 

whiskeyguy

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That statement contradicts itself, if it costs more to refine its going to raise the cost no matter how large the supply is.
It doesn't contradict itself. Even if the price is higher to refine, the added supply can still lower the price of the final product. For example, if one country was producing oil, and the demand was higher than the oil they produced, they could charge obnoxious prices for it. By having many countries produce oil (albeit at different costs of doing business) the global oil supply can better meet the demand. When supply is higher than demand, companies are forced to compete and sell the oil at a lower cost.


For example, if you have one company that produces cars, which cost them $15,000 each to make, they can charge $40,000 for each one because they're the only company producing them. If another company produces the same car for $18,000, but charges $22,000 each, it forces the initial company to charge $22,000 also, because they are now facing competition.
 

whiskeyguy

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That's in a pure free-market situation. The oil bidness is mostly an oligopoly.
To an extent. Still, two companies are better than one, four better than two, and so on. The problem is it's so expensive and time consuming to enter into the industry... both with financial investments and convincing governments to allow drilling.
 

weeniewawa

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oil drilling here would eventually lower prices just because of the added volume of oil on the world market

and if drilling won't lower the price of gasoline, why do the leftists claim that conservation will?
 

fletcher

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oil drilling here would eventually lower prices just because of the added volume of oil on the world market
But it hasnt in almost 40 years.

and if drilling won't lower the price of gasoline, why do the leftists claim that conservation will?
I guess you didnt read the article.
 

whiskeyguy

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But it hasnt in almost 40 years.
That's because increasing oil in the market is not the only factor. Gas 40 years ago also wasn't taxed $0.76/gallon (what we pay here in California). Gas costs less than it would if we didn't drill here, even if it's not actually lowering the price.
 

fletcher

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That's because increasing oil in the market is not the only factor. Gas 40 years ago also wasn't taxed $0.76/gallon (what we pay here in California). Gas costs less than it would if we didn't drill here, even if it's not actually lowering the price.
The study did adjust for inflation but I didnt see that they adjusted for taxation so you might be correct.
 

whiskeyguy

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The study did adjust for inflation but I didnt see that they adjusted for taxation so you might be correct.
Well taxation, regulation and other factors increasing the cost of doing business, conflict in the Middle East (although that's not really new to today), increased demand, Venezuela nationalizing it's oil industry, etc all impact this.

Increased production here probably would never substantially drop the price of gas at the pump, but it could drop it somewhat and definitely would curb the increase in fuel costs in the future. The problem is we wont see the affects of drilling now for years, which is why we should be focused on growth and allowing companies to invest in infrastructure like pipelines and new wells.