UPDATE: March 1, 2012 6:00 PM: Gas Price Facts: Domestic Oil Production Is At Eight-Year High.
March 1, 2012
Few, if any, issues has been exploited more than the con job pulled on Americans that if we produce more oil, gas prices will go down. That wasn’t true 30 years ago and is even less true today. And the historical data displaces any argument that it does.
The Center for American Progress published a report on this yesterday, and provided the following chart which shows how increased gas prices have followed increased oil production over the past 5 years.
As for the Keystone XL Pipeline issue being hotly debated today, the vast majority of Americans don’t know the true agenda of running the pipeline across America. All of the oil that will come through the pipeline is slated for overseas. Not one drop is pegged for American consumption. Therefore, it will not decrease the price of gasoline in the US. In fact, there have been several reports out lately that say it will increase gas prices in parts of the US.
If you’re not convinced that the product from Keystone is headed overseas, ask yourself this question: ‘Why do they want to pay the cost of building a pipeline all the way from Canada to Port Author in Southeast Texas?’ You may say it’s because that’s where the refineries are. Well, there’s many more across the US, totaling 148 with only 3 in Port Author.
No, the reason for bringing the pipeline to Port Author, Texas is because Port Author is very, very close to the Gulf of Mexico with very wide ship channels leading to their refineries.
Just so that you’re aware of it, we are exporting more gasoline today than ever (see following chart). In fact, gasoline was our number one export in 2011. So why are we doing that if the answer to cheaper gas is more gasoline in the US?
US gas prices are not set by supply and demand in the US (as confirmed by the previous graph), and haven’t been for several years. Prices are set by Wall Street speculators. The Old Man has reported on this several times, with this one in 2011. AllVoices gave us this report on speculators last year, and there are many more to choose from.
The same American Progress report referenced above points out the myth that oil companies need to get permission to drill for more oil in order to bring down the price of gas.
“If oil companies wanted to increase production, they could. In March 2011 the Department of the Interior released a report revealing two-thirds of oil-and-gas companies’ offshore leases and more than half of their onshore leases are not being produced.” [bold emphasis added]
Having spent more than 30 years in that industry, the Old Man can personally vouch for the fact that oil companies have thousands of oil leases they are not producing. Oil companies have a habit of buying leases from the government simply to keep their competition from buying them. Then many of those leases set idle for years – in some cases, decades – with no drilling activity.
So if you want to point a finger at the cause of high gas prices, do yourself and the country a big favor: Point it at the real culprits.
Never underestimate the difficulty of changing false beliefs [with] facts.
Economist Henry Rosovsky