Seems a remarkably simplistic and ill-thought article – no consideration of transport, supply bottlenecks, refining capacity, regulation and boutique fuel requirements or even grade of crude (tar sands are somewhat more expensive to refine than light sweet crude). Looks a very poor piece.
People say more domestic drilling would lower the price of gas. The United States produces less than half of the oil we use domestically; the rest comes from other countries. If we produced more, the price would go down, or so it’s said. By that logic, producing all of our oil domestically should score us a hefty discount at the pump. If only there were a country that produced all of its oil, we could look to see how low gas prices could get.
Actually, there is such a country, and it’s not far away in the oil-rich Persian Gulf. It’s our neighbor to the north. Canada produces all of its own oil and has enough left over to export what it doesn’t need. Canada must have much lower gas prices. Exactly how cheap is gas for those lucky Canadian drivers?
Oh, wait. It turns out it’s not so cheap after all. The average gas price in Canada in 2011 was $3.42 (U.S. dollars) not including taxes. Our gas was $3.29 (also in U.S. dollars without taxes). So we in the U.S. actually paid less for gas than our Canadian neighbors even though we import more than half our gas and Canada drills all of its own.
While that maybe true, I would imagine you would save some due to the transportation costs of having it shipped from the Middle East to the US. However, even if we didn’t save a dime, it is still an extremely strategic move for our national defense. One, we would have 100% control of our energy supply and two, we wouldn’t be sending hundreds of billions of dollars every year to countries who harbor terrorists and Ill will towards the West!
“Andrew Sharpless: Domestic drilling won’t lower price of gas.”
I think he owes Barry credit for the quote.
The marketplace determines price. As the USA participates in the global marketplace, there is indeed more to the price than just domestic supply. But saying that drilling here won’t lower the price is crass partisan political talking points, not fact.
What drilling will do is increase our wealth. There are supply gluts in the Midwest because our pipeline infrastructure needs to be expanded, but even if it doesn’t drop the price one iota, it would increase the wealth of our country. It would create jobs, and make us all richer.
The issue is not how much Canada produces, what matters is how our production affects the world market. Canadian producers still sell their oil on the world market even though it is used domestically. Increase the amount of oil on the world market and create a glut like happened in the 70s when we increased production. Oil went below $20/bbl.