Increased Oil Doesn't = Cheaper Gas

A May 11, 2012 International Business Times website said – According to this month's Congressional Budget Office report on the nation's energy security "Policies that promoted greater production of oil in the US would probably not protect US 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". The report outlines possible policy solutions to help insulate (protect) US consumers but they go against the position of the oil industry and of Mitt Romney who have accused President Obama of limiting oil and natural gas production on federal lands and promoting regulatory policies that stifle energy development; they argue that more production means greater national energy security and lower domestic energy prices. The congressional report says the opposite - "In fact, such lower prices would encourage greater use of oil thus making consumers more vulnerable to increases in oil prices. Even if the US increased production and became a net exporter of oil, US consumers would still be exposed to gasoline prices that rose and fell in response to disruptions around the world. In the US demand is relatively unresponsive to price changes in the near term because households and businesses have almost no ability to substitute one fuel for another in their transportation decisions or to substantially reduce their consumption of gasoline at low cost. As a result, households and businesses are limited in their ability to reduce the costs associated with higher oil prices." Should the US increase its oil production, other oil-producing nations could decide to keep prices from falling by cutting back on their own oil production thus making the US policy moot, said the report. Instead, the report suggests Washington could embark on policies and possible legislation that would reduce the nation's demand for oil through the advancement of renewable technologies and vehicles with even greater fuel efficiency and the increased availability of public transportation. The report also suggested the US could release oil from the nation's strategic petroleum reserve to offset temporary supply disruptions, something that has happened before.

In a nutshell the May 10 Oilprice.com article said - Both the large international oil companies and the smaller independents are finding themselves increasingly locked out of those areas richest in hydrocarbons and that regulations are getting tougher, environmental accountability is rising, and taxes are increasing. State-owned firms now dominate the oil and gas industry worldwide and hold 80% of the world's oil reserves, and the fear of expropriation is preventing expansion or participation in projects in many formerly docile countries. So, the industry is turning back to the US where private development of resources is still possible and legally well-protected. If the industry tells the public and policymakers the truth then the industry's attempt to expand its US operations will almost certainly fail. The truth is that the industry wants to fulfill its primary mission, namely, making money for its shareholders and managers. The industry has pretty much gotten all the easy oil there is to get on private land and the remaining easy oil is on public land and in offshore areas controlled by the federal government. In addition, new methods for bringing both oil and natural gas to the surface such as hydraulic fracturing currently enjoy environmental exemptions which the industry got written into federal law. The exemptions are little more than methods for transferring immense environmental costs onto the public through water, air and soil contamination as well as human and animal health effects--all in order to enhance industry profits. The industry has found that the best way to distract the public from the industry's unsavory motives is to insist that its new zest for drilling America's wilderness and offshore areas is all about helping the country achieve energy independence. US politicians--the non-serious ones, at least--are happy to predict low prices for gasoline once the energy juggernaut gets cranked up but this is all a sham. The oil industry does NOT want the public to understand that no matter what happens, Americans will continue to pay (to the highest bidder) the world price for oil and its products. So as not to get caught in an obvious lie, the industry prefers to focus on how much production could grow if only public lands and offshore areas were open to exploration and drilling, implying, but not saying, that this will somehow bring prices down. It has never been the plan of the oil and gas industry to charge Americans less than it can get elsewhere in the world. And the industry does NOT mean to expand renewable energy sources or to have Americans curtail their use of energy in any way, for example, by driving less and bicycling more, the paths to energy independence. Instead, ill-informed journalists regularly transmit industry claims that are designed to make us believe that American energy independence is at hand and erroneous claims that America now has a 100-year supply. Proven and probable reserves are likelier close to 22 years of consumption at the current rate. The actions of the US are not done in a vacuum and US consumers have little to no alternative to fossil fuels when it comes to transportation (vehicles need gasoline, semis and many trains need diesel, and planes need jet fuel -- all of which are derived from oil). The nation's oil production is in the hands of private firms, companies (unlikely to withhold oil for a rainy day) that sell oil and make a profit. On March 8 Tim O’Reilly said the price of gas doesn’t have anything to do with the President; Presidents don’t solve the problem of speculation. Unfortunately, judging from recent polls, the public is falling for the industry and Republican falsehoods.