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Excerpt: "Still not convinced? How about another 20 economists and analysts from across the political spectrum who will tell you the same thing ..."

File photo, US gas pump. (photo: CarGurus Blog)
File photo, US gas pump. (photo: CarGurus Blog)



20 Experts Who Say Drilling Won't Lower Gas Prices

By Jocelyn Fong, Media Matters for America

24 March 12

 

n 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:


  • Ken Green, American Enterprise Institute, "If the U.S. produced more of its own oil, it would probably reduce imports, but it's not likely that it would reduce prices ... We probably cannot produce so much oil to exert downward pressure on prices compared to the world market."

  • Peter Van Doren and Jerry Taylor, Cato Institute: "Sure, more domestic oil creates the possibility of fewer refined imports tied to the price of Brent crude, but given that the price of Brent sets the price for crude generally, the result would be more profit for domestic crude producers rather than significantly lower gasoline prices for Americans (not that there's anything wrong with that)."

  • Doug Holtz-Eakin, American Action Forum: "Domestic action to increase production will not lower gas prices set on a global market."

  • Christopher Knittel, MIT economist: "There are not many markets where the United States can't impose its will on market outcomes ... This is one we can't, and it's hard for the average American to understand that and it's easy for politicians to feed off that."

  • Pinelopi Goldberg, Yale economist: "US domestic policy has only tiny effect on the world price of oil. US foreign policy is probably more relevant than energy policy."

  • Steve Koonin, Institute for Defense Analyses: "When you hear the international oil companies advocating for energy independence, it's really about making money, which isn't a bad thing ... If they produce a million more barrels a day, they're not going to change the global price much. And since they know the global price is going up, they'll just make more money. There's nothing wrong with that, but it doesn't solve the price problem or the greenhouse gas problem."

  • Michael Levi, Council on Foreign Relations: "The amount of oil you produce at home doesn't affect the price ... You can lower your vulnerability to price by lowering your consumption of oil, but not by increasing your production."

  • Severin Borenstein, UC Berkeley economist: "Producing more oil domestically will enrich the U.S. economy, particularly U.S. oil companies and their workers. With oil so valuable, it may be a good idea, though the value must be weighed against environmental consequences. But it will have no discernible impact on gas prices, because it will change the world's supply/demand balance for oil by less than 2 or 3 percent over a decade or more."

  • David Peterson, Duke statistician: "U.S. production and demand have little to do with the price of gasoline in the U.S."

  • Edward Melnick, NYU statistician: When U.S. production goes up, the price of gas "is certainly not going down ... The data does not suggest that whatsoever."

  • David Sandalow, former Brookings fellow: "Drilling offshore to lower oil prices is like walking an extra 20 feet per day to lose weight. ... It's just not going to make much of a difference."

  • Tom Kloza, Oil Price Information Service: "This drill drill drill thing is tired ... It's a simplistic way of looking for a solution that doesn't exist."

  • Richard Newell, former Administrator of Energy Information Administration: "We do not project additional volumes of oil that could flow from greater access to oil resources on Federal lands to have a large impact on prices given the globally integrated nature of the world oil market."

  • Dean Baker, Center for Economic and Policy Research: "There is almost no disagreement among economists that drilling everywhere all the time offshore will have almost no impact on the price of gas in the United States. The reason is that we have a world market for oil. The additional oil that might come from offshore drilling is a drop in the bucket in a world oil market of almost 90 million barrels a day."

  • Lou Crandall, Wrightson ICAP LLC: "Higher oil prices today are a global phenomenon, and the additional supply from increased drilling by the U.S. would not alter the global balance of supply and demand greatly. Gasoline prices at the pump would be higher either way. The only difference is that a somewhat larger share of the revenue would accrue to domestic interests (governmental and private) rather than to foreign suppliers."

  • Paul Bledsoe, Bipartisan Policy Center: "The notion that somehow we can produce so much domestically that we will move the global price is incorrect."

  • Tom O'Donnell, The New School: "The amount of extra oil that the U.S. would produce, as far as affecting the world price of oil, is almost insignificant."'

  • Deborah Gordon, Carnegie Endowment for International Peace: "We can drill doggedly in our own backyards, but the price of gasoline will remain more a matter of speculation over externally-driven factors than tapping new sources of oil at home."

  • Joseph Dukert, energy analyst: "Americans tend to exaggerate the price effects of fluctuations in domestic production in relation to the total amount of oil in global trade. On the larger stage, the perception of geopolitical risks is more important."

  • Phyllis Martin, Energy Information Administration: "In 2009, the U.S. produced about 7 percent of what was produced in the entire world, so increasing the oil production in the U.S. is not going to make much of a difference in world markets and world prices ... It just gets lost. It's not that much."
  • Even Fox's John Stossel acknowledged recently that U.S. energy policy "doesn't make that much of a difference" on gas prices, contrary to what others at Fox News are claiming.

    There's simply no excuse for political reporters to tolerate, let alone advance claims that more U.S. oil production will meaningfully address our gas price woes. (Here's a taste, from the past week alone, of the type of he-said/she-said reporting that is just not cutting it: CNN, New York Times, Washington Post, Wall Street Journal, USA Today.) This is crucially important because once we understand that the U.S. is incapable of holding down the price of gasoline, we can start looking seriously at the options we do have to make ourselves less vulnerable to these inevitable price spikes.

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    -7 # The Voice of Reason 2012-03-24 23:04
    The only way to get lower oil prices is to demand it.

    Another way would be to abolish fuel-based economies. People need mobility; we do not to be taxed through the nose by the mile in a car designed to waste fuel. We are going bankrupt driving ourselves to work at a job that pays us less for more hours.

    The oil companies and the politicians they own are the ones 'addicted to oil'. They should all go to prison.

    But instead, we accept this blatant corruption as if it is the only way. A 'paralysis of will'.

    Fuel should be free. Oil companies and the politicians they own have taken far too much money out of our economy. They should give back.

    The oil in the earth belongs to the people of the planet.
     
     
    +8 # X Dane 2012-03-24 23:35
    Sorry, but with all due respect. You have the wrong "name" You do not sound reasonable at all. You need a lot more information
     
     
    -6 # The Voice of Reason 2012-03-25 13:33
    Thank you for your perspective, Mr. Oil Company representative.
     
     
    +11 # DAChrist 2012-03-25 05:40
    To The Voice of Reason:

    Fuel should be free? Really? You can not be serious. I agree that it's high time we find an alternative to fossil fuel. But whatever it is, it won't be free. Such is the nature of life on this planet. The economic law of supply and demand trumps your notion that you shouldn't have to pay a price for the goods you consume.
     
     
    +2 # jwb110 2012-03-25 11:51
    Quoting DAChrist:
    To The Voice of Reason:

    Fuel should be free? Really? You can not be serious. I agree that it's high time we find an alternative to fossil fuel. But whatever it is, it won't be free. Such is the nature of life on this planet. The economic law of supply and demand trumps your notion that you shouldn't have to pay a price for the goods you consume.


    I think the point he is trying to make is that the supply and demand idea doesn't apply. Artificial shortages based on refining capacity is commonplace. While I am not entirely behind the concept of free fuel, it must be said that were that to happen the amount of spendable cash available to be applied to other segments of the economy would be greatly increased.
     
     
    -4 # The Voice of Reason 2012-03-25 13:43
    The point is they could give it away for years before they ever lose a dime. But if you want to keep paying the oil companies, go ahead. It's your bankrupt economy.

    Far be it from me to put ideas into your heads. I'm not telling anyone what to do. This is just my opinion, which, last time I checked, I am still entitled to.
     
     
    -4 # The Voice of Reason 2012-03-25 13:26
    Supply and demand should be abolished too. In your words, greed and corruption are the guiding principles of your economy. You get what you deserve.
     
     
    +4 # Granny Weatherwax 2012-03-25 15:13
    And gravity as well.
    There is a place for markets, supply and demand and competition.
    What we need to clamor about is that there is also room for public service and cooperation.
    But claiming that Earth is flat does not help.
     
     
    -5 # The Voice of Reason 2012-03-25 21:24
    So why do you say the earth is flat?
     
     
    +5 # unitedwestand 2012-03-25 13:52
    What I think you are trying to say is that you are mad as hell that we are still being controlled by last century's energy sources, and have not moved on with everything in our power to forward renewable energy. I agree.

    No matter what energy sources are used , we will need a company or some entity to get it done for us, we can't individually dig up our own oil, so someone has to get paid for that service.

    The problem is is that the fossil fuel companies don't want to give up the cash cow and for decades have thrown every wrench in the works to stifle clean energy technology to flourish and be implemented. THAT IS WHAT I'M MAD AS HELL ABOUT!
     
     
    +11 # X Dane 2012-03-24 23:31
    Great, the experts have spoken. As the president has said almost every day the past week: We use 20% of the world's oil, and we only HAVE 2%. THAT IS TWO PERCENT
    So no matter HOW much we drill any idiot should be able to see the truth. In addition China and India now are big consumers, so we have stiff competition from 2 countries with vastly bigger populations than ours.

    Any oil pumped in our country can not be kept, it ALL goes on the open market.
    What raises the oil prices is feat of war in the Middle East.....and speculation.
     
     
    +6 # John Locke 2012-03-25 08:24
    X Dane: lets correct a misstatement you made. Fear of war did not cause the price of oil to spike in the 70's and it has not now either.
    The prices are being artifically increased, both by Wall Street speculation and Oil Company gouging. For 2011 the Oil Companies actually exported more oil then we imported!!!!... .See link below!
    The real answer is to nationalize the Oil Companies like Chavez has done.
    Also, we have been a large Oil export country, WHY?

    http://www.usatoday.com/money/industries/energy/story/2011-12-16/us-oil-boom/52053236/1
     
     
    +1 # Reductio Ad Absurdum 2012-03-25 12:49
    Speculation can not be divorced from fear of war. Experts estimate at the 18% price spike (where oil was a couple of weeks ago; it's higher now) was directly due to concerns about potential conflict with Iran, and the speculation fed off those concerns.
     
     
    +1 # John Locke 2012-03-25 15:13
    If we were buying on the Open Market! but don't forget we export more then we import...so there is no reason other than greed,
     
     
    +1 # X Dane 2012-03-26 03:04
    John, how ca we export MORE than we import when we only have 2% of the world's oil, and we use 20% ???
     
     
    +1 # John Locke 2012-03-26 09:21
    Look at the links I have provided, you can also get a print out of monthly imports and exports. 2% are the alleged reserves, not the actual production amounts.
     
     
    +2 # John Locke 2012-03-26 09:32
    S Dane: You are confusing Reserves with production, they are two different statistics, Reserves are what is claimed to be underground, production is barrels of oil taken from the ground, we can have 2% of reserves and produce 50% or even 90% of the worlds supply. We have recently been increasing production again after several years of slowing it down, but it is all going out of the country where shipping charges and speculation drive it up, and then we import oil where shipping charges and speculation again drive the cost up. The oil companies "could" very well be playing a game and using the same oil to run up costs at the pump? I don't know that answer, but it is not an unrealistic assumption given their history and greed.
     
     
    +2 # Buddha 2012-03-26 10:26
    Because what we are exporting are the distillates of crude oil (gasoline, diesel, etc). Most other nations don't want to build refineries and take the huge risks of importing crude oil. We on the other hand in America evidentally care nothing about the environment, and are using nowhere near our full refinery capacity. So we import more crude than we truly need, we refine it and export the distillates. Just as we'll be doing now that Obama caved to American voter ignorance with Keystone...now those tar sands which end up at MidWest refineries and mostly go into our domestic supply chain, will now go to refineries on the Gulf Coast for more easy export of the gasoline.
     
     
    +1 # Reductio Ad Absurdum 2012-03-26 09:59
    Nothing you've stated here refutes my statement.
     
     
    +1 # John Locke 2012-03-25 15:15
    What experts? Lets stop exporting to run up oil prices or nationalize the industry...
     
     
    +1 # RMDC 2012-03-25 19:24
    Speculation and gambling can be driven by anything. If some commodity trader got laid one night, he might bid up the price of gas the next day. There is no rationality in gambling or speculation. It is poker. they try to read the faces of their opponents -- only they don't see their opponents. They just hallucinate about them.
     
     
    0 # The Voice of Reason 2012-03-25 13:37
    Fear and speculation. What does that have to do with the price of anything.

    I'm so afraid ... let's jack up the price. They're not afraid, they're happy.

    Speculation is buying in the 'hopes' that the price will go up, in order to rake in millions for doing nothing.

    If this is anyone's idea of an economy, it is rife with abuse, greed and corruption.
     
     
    -1 # Granny Weatherwax 2012-03-25 15:19
    Wake up.
     
     
    0 # The Voice of Reason 2012-03-25 21:19
    to what, corruption? They are your standards, not mine.
     
     
    -1 # X Dane 2012-03-26 03:09
    EXACTLY. HALLOOOOOOOOOOO OO
     
     
    0 # The Voice of Reason 2012-03-26 12:14
    So, you're happy that corruption and greed are mainstream business as usual. Okay, just so we're clear on this one. Then you're not saying wake up, you mean kiss the ring.

    For sure this economy won't crash. Nothing like a sound foundation of graft and greed to support it.
     
     
    +7 # Majikman 2012-03-25 01:01
    When have facts ever mattered to the repugs?
     
     
    +3 # humanmancalvin 2012-03-25 09:33
    This is sadly humorous. I just finished posting on another RSN article about facts having no meaning to the red state population of America. All I would have to do is alter a word or three and I could post the same words here. Facts do not matter to those that choose to live with the wool pulled down over their eyes. Damnit, if Fox News and my preacher say it ain't then it ain't. If they say it is then it is. Its takes a certain amount of control to simply walk the streets of this country without screaming at these people to wake up, WAKE UP.
     
     
    +2 # LeeBlack 2012-03-25 11:19
    This is one of the few articles we see where reporters have 'investigated'; too many reporters just parrot what the politicians say without challenging the validity of their positions. So we go down the road again - more drilling, pipelines, fracking - instead of biting the bullet to look at alternatives and efficiencies and showing a concern for the environment. One example: Instead of a pipeline we could focus on rail - a very efficient way to move goods. Imagine eliminating long-haul trucking.
     
     
    +2 # The Voice of Reason 2012-03-25 13:31
    Amazing, we can send space craft out of the solar system, but we can't design a car that doesn't waste fuel and enrich the oil companies and the politicians they own.

    Oh well, guess we'll just have to keep paying the oil companies for their hard work and their concern for human dignity ... well, maybe for their ... why do we pay them again?
     
     
    0 # Merschrod 2012-03-25 11:28
    The clue in all of this is that the Brent prices sets the base. Now you know why some oil producing countries set the prices lo for internal production and also low taxes, in order to make it affordable for low income citizens. They also do that with gas for cooking to reduce the pressure on forests (deforestation that comes from charcoal manufacture.

    We could drop the State and Federal taxes on fuel, but then we would have to eek other revenue to maiantain the roads.

    But, let's face it, our fuel cost are low compared with Europeans (So is food in part due to cheap fuel.)

    Kris
     
     
    +5 # RMDC 2012-03-25 11:50
    Of course -- supply and demand have very little to do with the setting of prices. They are set on the commodities markets by speculators and gamblers who are always trying to run the price up or down by starting any kind of rumor that will influence the game.

    It is time to outlaw commodities markets and gambling on things that people need for their lives. No society that believes in justice or humanity would allow itself to be controlled by gamblers -- people who are sick in their minds.
     
     
    0 # carioca 2012-03-26 05:22
    No, but massive group prayer will.

    Amerika, the only country in the world where people actually pray to dog, er god, for lower petrol prices.

    Unbelievable.
     

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