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Thu Mar 22, 2012, 03:40 PM

20 Experts Who Say Drilling Won't Lower Gas Prices

http://mediamatters.org/blog/201203220011

In a pretty impressive act of journalism, the Associated Press recently conducted a "statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production." The result: "No statistical correlation between how much oil comes out of U.S. wells and the price at the pump." It's neat to see math cut through the talking points and get straight to the truth of the matter -- which is that expanding drilling is a fundamentally ineffectual response to gas price spikes.

Given that changes in U.S. oil production don't move gasoline prices, it should be clear that U.S. government policies related to drilling are of even smaller consequence. Indeed, 92 percent of economists surveyed by the Chicago Booth School of Business agreed this week that "changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies."

Still not convinced? How about another 20 economists and analysts from across the political spectrum who will tell you the same thing:
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Reply 20 Experts Who Say Drilling Won't Lower Gas Prices (Original post)
Bill USA Mar 2012 OP
CAPHAVOC Mar 2012 #1
Bill USA Mar 2012 #3
CAPHAVOC Mar 2012 #5
louis-t Mar 2012 #2
Bill USA Mar 2012 #4

Response to Bill USA (Original post)

Thu Mar 22, 2012, 03:44 PM

1. Then

 

Lets stop all the drilling and close the wells. With this plan gas will soon be back to 75 cents a gallon. Sounds good to me.

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Response to CAPHAVOC (Reply #1)

Thu Mar 22, 2012, 04:21 PM

3. I guess I'll have to disabuse you of some faulty thinking. You are saying that if changes in oil

production in the U.S. don't have any affect on gasoline prices that that means we could cap all the wells currently producing oil - taking our production to zero - and this would not have any affect on oil/gasoline prices. This of course is obvious nonsense.

The article is talking about increases or decreases to our total oil production. You are then equating that with stopping ALL production and saying that stopping ALL production would not have any affect on prices. The two are not the same. We produce about 11% of the total world's crude oil production so capping all producing wells and stopping all production in a short period of time, would have an impact on prices.

When we increase our oil production we do not double it in the short term or reduce it to zero. Our ability to change the level of oil production is not that great. It takes years to increase oil production just a few percentage points.





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Response to Bill USA (Reply #3)

Thu Mar 22, 2012, 07:17 PM

5. It should go way down with this logic.

 

The less we drill. THE CHEAPER THE GAS. Unless we get it just right. If drilling raises the price...Stop Drillimg! The price will crash. Close the stinking dirty refineries and quit fracking. I gotta bike. I am tired of this Psychobabble. Phooey.

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Response to Bill USA (Original post)

Thu Mar 22, 2012, 03:44 PM

2. One fact that is usually forgotten...

Not all new wells immediately start pumping oil. Most are capped, as was the BP well that blew up.

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Response to louis-t (Reply #2)

Thu Mar 22, 2012, 04:39 PM

4. that's not all. With all the talk of increasing gas/oil prices nobody has mentioned that West Texas

INtermediate oil which for decades was priced at about 6% to 8% HIGHER THAN North Sea Brent (basically, all oil from outside the U.S.) in about 2005 started going down in price relative to NSB. When we got into 2011 the concerns about how the Arab Spring might affect oil supplies, and then even greater concerns about Iran's progress towards building a nuclear bomb caused speculators to push up the price of oil. But the price of WTI didn't go up as much as NSB. In fact WTI averaged 14% lower than NSB for 2011.

NOw why was that? The decline in the premium paid for WTI just coincidentally occurred right as we started producing ethanol in significant volume (in 2010 ethanol was meeting about 105 of our fuel needs). When a risk factor came to be applied to the price of oil this magnified the impact of ethanol bringing it's impact on WTI to lowering what had been priced at 6% to 8% above NSB to 14% BELOW NSB. The total swing in price is 20% to 22%. This is because 10% of our fuel supply is being met by ethanol.

But, interestingly enough, nobody is talking about this!

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