"Drill, Baby, Drill" Won't Lower Gas Prices

Republicans love to tell simple lies, because those are the most likely to be believed. One of those simple lies they have repeatedly told is that the answer to high gas prices is just to drill for more oil in the United States (and just off-shore). That sounds like it would work. After all, wouldn't more oil production drive down the price of oil (and therefore gasoline)?

Actually no. If there was a glut of oil on the world market, more than could possibly be sold, the price might go down. But that is not the current situation (nor will it be at anytime in the future). Every bit of oil produced can easily be sold, because the demand for it is high and increases with each passing day. If one country doesn't want to buy it, there are plenty more that will (and at whatever price is asked for it).

The scarcity of oil (and the prospect of it grower much scarcer as we approach the point of "peak oil") makes it a commodity that speculators love. They know they can make money no matter how much they have to pay for the oil, because they know they can always sell that oil no matter how high they jack up the price. And it is this action by speculators on Wall Street that drives up the price of oil (and therefore gasoline) -- not the lack of drilling or production (both of which are higher under President Obama than they were during the Bush administration).

Just look at the chart above. It clearly shows that the amount of oil a country produces (or doesn't produce) has little to do with the price of gasoline in that country. The chart shows that the ups and downs of gas prices are mirrored in the United States, Japan, and Canada -- even though the United States imports 63% of its oil (less than under Bush II), Japan imports 100% of its oil, and Canada produces so much more oil than it can use that it actually exports 77% of its oil.

Obviously, the amount of oil production in each country has nothing to do with the price of gas in that country. A far better way to control the price of gasoline is through greater efficiency and less dependence on oil (foreign or domestic). Here is how the nonpartisan Congressional Budget Office puts it:

Policies that promoted greater production of oil in the United States would probably not protect U.S. consumers from sudden worldwide increases in oil prices stemming from supply disruptions elsewhere in the world, even if increased production lowered the world price of oil on an ongoing basis. In fact, such lower prices would encourage greater use of oil, thus making consumers more vulnerable to increases in oil prices. Even if the United States increased production and became a net exporter of oil, U.S. consumers would still be exposed to gasoline prices that rose and fell in response to disruptions around the world.


In contrast, policies that reduced the use of oil and its products would create an incentive for consumers to use less oil or make decisions that reduced their exposure to higher oil prices in the future, such as purchasing more fuel-efficient vehicles or living closer to work. Such policies would impose costs on vehicle users (in the case of fuel taxes or fuel-efficiency requirements) or taxpayers (in the case of subsidies for alternative fuels or for new vehicle technologies). But the resulting decisions would make consumers less vulnerable to increases in oil prices.