Reblog: U.S. oil production and the price of gasoline

From TYWKIWDBI:

The price of a gallon of gasoline is approaching record-high levels in the U.S.  Some politicians and businessmen argue that the U.S. needs to increase its production of oil to counter this trend, by increasing offshore drilling or extracting tar sands, or by other means.

Recently Senator Jeff Bingaman (D-NM), chairman of the Senate Energy Committee addressed this question:

“Let me state this as clearly as I can – what I believe is really without dispute among experts.  That is, we do not face cycles of high gasoline prices in the United States because of a lack of domestic production.  We do not face these cycles of high gasoline prices because of lack of access to federal resources, or because of some environmental regulation that is getting in the way of us obtaining cheap gasoline.

“As was made clear in a hearing we had in the Senate Energy Committee in January, the prices that we are paying for oil and the products refined from oil, such as gasoline, are set on the world market.  They are relatively insensitive to what happens here in the United States with regards to production.   Instead, the world price of oil and our gasoline prices are affected more by events beyond our control, such as instability in Libya last year or instability in Iran and concerns about oil supply in Iran this year.

The top chart shows that price variations over the past fifteen years are similar in all these countries (though lower in the U.S. because of lower taxes).   His next chart shows that the price of gas in the U.S. is independent of U.S. oil production:

“While domestic oil production plays an important role in the energy security and economy of our country, its contribution to the world oil balance is not sufficient to bring global oil prices down.   And, for this reason, increased domestic production unfortunately will not bring down gasoline prices in our country.”

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2 Responses to Reblog: U.S. oil production and the price of gasoline

  1. luisv91 says:

    I read this a few weeks ago while there was a big bru ha ha over the Keystone Oil Pipeline in Congress.

    Turns out that it’s Wall Street speculators that are driving the oil prices through the roof. Like the article mentions, it has jack-shit to do with domestic oil production, which by the way is at a pretty all time high! That still won’t stop Republicans from spewing their ignorant rants, like we’re not drilling enough, or it’s Obama’s fault gas is so high.

    As a funny note. A few weeks ago a democrat in Congress (from IL I believe) tried to pass an amendment to the Keystone Pipeline bill that would’ve required all oil obtained from drilling in Alaska to remain in the US for local consumption. Now you would think Republicans would be a-ok with this, seeing how they claim we’re not producing enough oil or drilling enough right? Wrong! They killed the bill! See if the oil stays in the USA it would go from the pipeline–> down to the gulf for refinement –> sold locally. The end result= $1.00/gal gas, i.e. not enough of a profit for the oil companies. But if it is sold in the global market it is subject to international prices, then oil companies get to mark up the oil and turn a hefty profit and we get hosed all the while our distinguished gentlemen in Congres get a hefty “political donation” from the oil companies. It is pretty disgusting. Still, leave it to Republican voters to vote against their best interests. *sigh*

  2. john millar says:

    oil taken out of the ground in this country should not be sold overseas. It is time we took care of our own. Raising the price of oil raises the price of everything.Keep it up and we can say goodbye recession hello depression.

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