Price to production: no relation

Democrat or Republican, what can we all agree on? Gas prices are just too high. Changing these prices has been on the platform for national candidates since president Jimmy Carter. Recently the debate has shifted to domestic oil projects. Many Republicans in recent debates for candidacy have argued that president Obama has not done everything in his power to lower the burden of gas prices, mainly by allowing domestic drilling and projects such as the Keystone XL.

But what are the facts about domestic oil projects in the U.S. and overall prices at the pump? The answers may surprise you.

Math and history show there is no statistical correlation between oil coming out of U.S. ground and prices at your local Shell. Why is this? Well many reasons, the main one being that oil is a world market [global commodity]. There are so many producers that it is impossible for one producer to control the market price (per barrel that is).  Proponents of the Keystone XL pipeline say that they can lower price by bringing in 25 million barrels of oil per month (domestically). Funny they should mention that since that is the exact increase in domestic production that occurred between February and November of 2011. And what happened? Monthly gas prices went up a dime for the same period.

Bottom line is that sometimes gas trends with U.S. production and sometimes it doesn’t, the two are just not related. It has, however, become a legislative imperative to corellate price and production

Do you agree with the facts? Are we focusing on the wrong thing with domestic drilling/oil projects in general?

What is the surefire way to lower our burden at the pump?

Advertisements