"Drill, Baby, Drill!" In US Has No Effect On Gas Prices, It Turns Out

Domestic oil production has gone up every year under Obama, but gas prices continue to rise. The GOP suggests that it's part of a liberal conspiracy to make innocent Americans turn Socialist Green. Even Romney has said that it's Obama's fault. But really, it's simply that oil is a global commodity.

I can't wait for the election to be over.

Reality has a liberal bias.

Kraint wrote:

Reality has a liberal bias.

Sure. That's why I stay away from the lamestream reality.

Prices are tricky indicators. It may just be that exploitation of US oil is already "priced into" futures markets or whatever. I think it's pretty much inevitable that US oil reserves will be more or less fully exploited over the next few decades, as energy prices rise.

Kraint wrote:

Reality has a liberal bias.

Guys like you are part of what we call the "reality-based community". That's not the way the world really works anymore.

Yeah, in the span of 30 minutes a few weeks ago I heard a couple of lovely reports. One was about how the US was exporting more gasoline than it was importing for the first time in well.. I don't remember. But it was a long time. Of course the import/export thing was regional but on the big balance sheet we exported more than imported. They also went on to mention that that the supply of gasoline was greater than ever and that US consumption was way down.

A little later they talked about how the price of gasoline was reaching an all-time high, was continuing to climb and that oil company profits were also at an all-time high. Of course I believe they stated gas consumption in several up and coming countries was up something like 40%?

If we produce more oil, doesn't OPEC simply reduce their production, thereby keeping total global production wherever they consider "ideal" to be?

Robear wrote:

Domestic oil production has gone up every year under Obama, but gas prices continue to rise. The GOP suggests that it's part of a liberal conspiracy to make innocent Americans turn Socialist Green. Even Romney has said that it's Obama's fault. But really, it's simply that oil is a global commodity.

I can't wait for the election to be over.

I'll remember this when I travel back into time during 2004 when President Bush was blamed for rising gas prices. Both parties, and many of their supporters don't care about factual reasons but instead of scoring points.

Ulairi wrote:
Robear wrote:

Domestic oil production has gone up every year under Obama, but gas prices continue to rise. The GOP suggests that it's part of a liberal conspiracy to make innocent Americans turn Socialist Green. Even Romney has said that it's Obama's fault. But really, it's simply that oil is a global commodity.

I can't wait for the election to be over.

I'll remember this when I travel back into time during 2004 when President Bush was blamed for rising gas prices. Both parties, and many of their supporters don't care about factual reasons but instead of scoring points.

True, Obama did point out that gas prices had gone up under Bush as well in order to score some cheap points while campaigning, but I think one major difference is that Bush claimed he would be able to "talk with our friends in OPEC" and decrease gas prices. I'm not sure that Obama has ever claimed that he would decrease gas prices (he's been too busy breaking other campaign promises ;p ).

absurddoctor wrote:
Ulairi wrote:
Robear wrote:

Domestic oil production has gone up every year under Obama, but gas prices continue to rise. The GOP suggests that it's part of a liberal conspiracy to make innocent Americans turn Socialist Green. Even Romney has said that it's Obama's fault. But really, it's simply that oil is a global commodity.

I can't wait for the election to be over.

I'll remember this when I travel back into time during 2004 when President Bush was blamed for rising gas prices. Both parties, and many of their supporters don't care about factual reasons but instead of scoring points.

True, Obama did point out that gas prices had gone up under Bush as well in order to score some cheap points while campaigning, but I think one major difference is that Bush claimed he would be able to "talk with our friends in OPEC" and decrease gas prices. I'm not sure that Obama has ever claimed that he would decrease gas prices (he's been too busy breaking other campaign promises ;p ).

President Bush never claimed that he could talk to our friends in OPEC. President Bush and President Obama made promises about energy that they couldn't keep and both sides don't care about the facts when they are trying to score points in the perpetual news cycle and election cycle we live in.

Ulairi wrote:

President Bush never claimed that he could talk to our friends in OPEC. President Bush and President Obama made promises about energy that they couldn't keep and both sides don't care about the facts when they are trying to score points in the perpetual news cycle and election cycle we live in.

George Bush wrote:

"I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply," Mr. Bush, the presumptive Republican candidate for president, told reporters here today. "Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot."

http://www.nytimes.com/library/polit...

absurddoctor wrote:
Ulairi wrote:

President Bush never claimed that he could talk to our friends in OPEC. President Bush and President Obama made promises about energy that they couldn't keep and both sides don't care about the facts when they are trying to score points in the perpetual news cycle and election cycle we live in.

George Bush wrote:

"I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply," Mr. Bush, the presumptive Republican candidate for president, told reporters here today. "Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot."

http://www.nytimes.com/library/polit...

*insert the video Fox runs of the President promising lower fuel prices*

What candidates say and what Presidents say are very different. I wish candidates were held to account for what they said during the election but they aren't.

Adding to that, looking at Obama's campaign promises on Energy, he's actually scored pretty well as far as 'promises kept' go, though whether or not keeping the majority of those promises actually accomplishes much seems up for debate.

http://www.politifact.com/truth-o-me...

Ulairi wrote:
absurddoctor wrote:
Ulairi wrote:

President Bush never claimed that he could talk to our friends in OPEC. President Bush and President Obama made promises about energy that they couldn't keep and both sides don't care about the facts when they are trying to score points in the perpetual news cycle and election cycle we live in.

George Bush wrote:

"I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply," Mr. Bush, the presumptive Republican candidate for president, told reporters here today. "Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot."

http://www.nytimes.com/library/polit...

*insert the video Fox runs of the President promising lower fuel prices*

What candidates say and what Presidents say are very different. I wish candidates were held to account for what they said during the election but they aren't.

If they actually exist, please do insert them. All I have been able to find so far are Republicans claiming he made such a promise.

http://www.politifact.com/florida/st...

absurddoctor wrote:
Ulairi wrote:
absurddoctor wrote:
Ulairi wrote:

President Bush never claimed that he could talk to our friends in OPEC. President Bush and President Obama made promises about energy that they couldn't keep and both sides don't care about the facts when they are trying to score points in the perpetual news cycle and election cycle we live in.

George Bush wrote:

"I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply," Mr. Bush, the presumptive Republican candidate for president, told reporters here today. "Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot."

http://www.nytimes.com/library/polit...

*insert the video Fox runs of the President promising lower fuel prices*

What candidates say and what Presidents say are very different. I wish candidates were held to account for what they said during the election but they aren't.

If they actually exist, please do insert them. All I have been able to find so far are Republicans claiming he made such a promise.

http://www.politifact.com/florida/st...

Fox News is running a video with Senator Obama infront of a gas station talking about how he's going to fix energy by pushing for green, windfall profit tax (lol) etc. When I get home tonight I'll have a gander on Youtube.

Early during the primary process there was a candidate that was talking about $2 a gallon gas but I think it was Bachmann.

On the flipside, anyone want to take a guess an what kind of profits Exxon Mobile posts this quarter?

Bear wrote:

Early during the primary process there was a candidate that was talking about $2 a gallon gas but I think it was Bachmann.

On the flipside, anyone want to take a guess an what kind of profits Exxon Mobile posts this quarter?

Very high. But, Exxon Mobile isn't doing anything wrong by being profitable and that line of attack doesn't do anything but appeal to populist fear. I think the President should push the end to subsidies but he wussed out on actual tax reform that would do that.

Edit: I'm just so cynical when it comes to the political process and anything ever getting done.

Ulairi wrote:

Fox News is running a video with Senator Obama infront of a gas station talking about how he's going to fix energy by pushing for green, windfall profit tax (lol) etc. When I get home tonight I'll have a gander on Youtube.

I'll assume you mean:

http://www.youtube.com/watch?feature...

I saw some edited versions around as well, but that appears to be the entire speech he gave. Nowhere does he claim that he will decrease gas prices. He does say that he'll put some short-term solutions into place to help people deal with the rising fuel costs (such as the 'wind-fall tax', which appears to be the only significant energy-related campaign promise he has not followed through on). He then mentions in investing in a ten-year plan for 'green energy', states that this problem will not be fixed quickly, but essentially that he would begin pushing us in the 'right direction'. Again, whether or not that is actually the right direction is up for debate, but to claim that he even implied that his administration would provide lower gas prices anytime during a first or even a second term is completely false.

Bear wrote:

Early during the primary process there was a candidate that was talking about $2 a gallon gas but I think it was Bachmann.

On the flipside, anyone want to take a guess an what kind of profits Exxon Mobile posts this quarter?

Not sure what she said, but Newt Gingrich promised $2.50.

Either the Saudis have the spare capacity to bring the price down and they are not pumping more or they don't have the spare capacity and we have hit Peak Oil.

I'll remember this when I travel back into time during 2004 when President Bush was blamed for rising gas prices. Both parties, and many of their supporters don't care about factual reasons but instead of scoring points.

Bush very ably raised gas prices by invading Iraq and causing massive uncertainty in the Arab world. That's different from the claim that the President can change gas prices in the US through the use of some executive power to mess with energy prices or supply.

Relevant comment on reddit.

boutique fuels also add to the cost as we cannot use the same fuel in everystate.

As far as I can see, that commenter's really confused. He's mixing two separate markets together and thinking that they are same thing -- oil, and refined gasoline. And then he's mixing his analysis of the flows up as well.

Oil and gas are not the same thing. Oil can be (and is) turned into a lot of things. Because it's basically pure energy, the demand for it is probably functionally infinite. No matter how much we pulled out of the ground, we could find uses for it.... as more and more showed up, it would get cheaper and cheaper, and then we'd find new ways to use that cheap energy. The world economy could, in other words, eventually soak up any amount of oil provided.

Gasoline is a refined form of oil that only works in combustion engines, mostly cars. The US has a gigantic amount of refinery capacity. The refiners are one of many consumers of oil. They are bidding for whatever supply is on the market... basically, whoever is willing to pay THE MOST for oil gets what he or she wants. Then the next person in line gets some, then the next person, and so on. This is done in parallel through the price mechanism: millions of separate buy/sell decisions each day move the price around. Some potential purchasers of oil will only buy when the price becomes low enough; some potential sources of oil will only come online when the price is high enough. Price is how the supply and the demand negotiate what something is 'worth'.

So the refiners are one customer among many, but probably the largest single consumer. As the price fluctuates around, and drives some people out of the oil market, the refiners aren't usually driven out, because they can usually afford higher prices than almost anyone else. Then the gasoline they refine hits the market, and it once again is allocated among the world economies based on who's willing to pay the most. It's cheaper here than most other places because we don't have to pay transport costs, but the refineries are making just as much per gallon from Americans as from Europeans.

The demand for gasoline is fairly inelastic, because it's fairly cheap compared to many goods, and it's critically important to the functioning of the economy. Most entities can afford to pay a lot more for gas than they actually do. They won't LIKE it, but they can come up with more money for it if necessary. So, even small disruptions in supply can cause huge price swings, and small increases in demand can do the same. Everyone is bidding for a limited resource, and many users can afford a lot more than they presently pay, so the price can go up very quickly and stay there for an extended period of time. Eventually, the lack of access to cheap energy results in economic slowdowns, and more and more parts of the economy find that they cannot, in fact, pay what gasoline costs, so consumption drops, and prices come back down.

Once the price of gas drops, then refiners can't make a profit buying oil at the old prices, so they stop buying. The decreased demand at the old price causes the price to drop until demand picks up the slack again. But that's a separate market, and if other demands were high enough, you could still theoretically see $100/bbl oil, with no cars on the road at all.

This is why price controls won't work. Oil and gas go to the highest bidder. If you force a commodity to be sold for less, all you do is force your buyers to the back of the line, resulting in shortages. And even if you control the original source of the commodity, then you can hold prices down locally for awhile, but local producers will stop investing as much (or anything) into producing more, so that your supply either stops growing or actively contracts. Once again, you end up with shortages, it just takes longer.

So, yeah, the President could declare that gasoline is $1 a gallon, right now, at least with Congressional backing. Congress could absolutely do that. Gasoline would instantly return to $1/gallon.

You just couldn't get any.

Oh, and I should also mention that global speculative finance has a huge impact on this market, as we found the last time gas was over $100/barrel.... the various derivative instruments, with all the ridiculous amounts of currency sloshing around and absolutely, utterly committed backing from central banks, can exert unbelievable phantom demand and supply on the market, sending prices all over the damn place.

This is a symptom of our severe systemic monetary disorder, and you can expect bubbles to be constant and ongoing into the future. The foundations of the real economy, and oil is probably THE linchpin, are being rotted away by the financial system.