About This Blog
If you listen to conservative messaging, Barack Obama has singlehandedly stopped oil drilling and oil production in the United States. Seriously...if you imbibe Rush, Sean, Bill-o, or any of the other rightwing welfare-media sources...you would think that as soon as Obama raised his right hand to take the inaugural oath....all oil rigs within U.S. jurisdiction were shut down. Listening to the daily liars of the right....that's what you would conclude.
Even though none of it is factual....with gasoline prices on the verge of posting new highs.....deceptive Republican candidates, and their cheerleaders, are taking the opportunity to blame and bash the Dark Knight. The economy is improving, employment is slowly improving, and Bin Laden is still dead....banning condoms and the pill doesn't seem to be, you know, catching on.....so Republican candidates have been scrambling for something, anything.....with which to blame the Democratic president.
After declining to levels not seen since the 1940s, U.S. crude production began rising again in 2009. Drilling rigs have rushed into the nation's oil fields, suggesting a surge in domestic crude is on the horizon.
The number of rigs in U.S. oil fields has more than quadrupled in the past three years to 1,272, according to the Baker Hughes rig count. Including those in natural gas fields, the United States now has more rigs at work than the entire rest of the world.
"It's staggering," said Marshall Adkins, who directs energy research for the financial services firm Raymond James. "If we continue growing anywhere near that pace and keep squeezing demand out of the system, that puts you in a world where we are not importing oil in 10 years."
In an Obama statement ruled "mostly true" by Politifact, Obama claimed....
"Last year, American oil production reached its highest level since 2003. Let me repeat that. Our oil production reached its highest level in seven years. Oil production from federal waters in the Gulf of Mexico reached an all-time high. For the first time in more than a decade, imports accounted for less than half of what we consumed. So any notion that my administration has shut down oil production might make for a good political sound bite, but it doesn’t match up with reality,"
Our importing of "foreign" oil is down....
Total imports in January (2012) accounted for 56 percent of U.S. oil demand, down from 61.4 percent a year earlier.
Our nation's use of gasoline has declined even more....
Gasoline demand at 9-year low for month
One more fact....
For the first time since late 2008, world oil demand fell over the course of a full quarter.
Not only is the U.S. using less oil...but world oil consumption fell last quarter as well.
Quick summary: we're using less gasoline....we're producing more crude oil....using less "foreign" oil...and new oil rigs have quadrupled during Obama. Even world oil use declined last quarter.
The right's argument is that Obama is simply reaping the rewards of Bush's "drill-baby-drill" policies. For sake of the argument of this post....that doesn't matter...so let's set that aside for now.
In spite of all the empirical market data, we were warned a few months ago by economic "experts" that gasoline prices in the U.S. would rise to about $4.50 per gallon by spring.
So what gives? The U.S. is producing more domestic oil while consuming less, and still gasoline prices are rising. What about the market principle of supply and demand? Markets, I've been told, are not only rational, but infallible. Why shouldn't gasoline pricing be going down instead of up?
To find the answer, let's re-examine the claim mentioned earlier by Marshall Adkins, the Raymond James rep....
"If we continue growing anywhere near that pace and keep squeezing demand out of the system, that puts you in a world where we are not importing oil in 10 years."
And then what would happen? What would happen to gasoline pricing if the U.S. didn't import even one single barrel of "foreign" crude? Would gasoline prices in America plummet?
Absolutely not. If the U.S. produced all of the oil it consumes.....gasoline pricing in the U.S. would not be affected at all. Not one little bit.
Gasoline prices are not subject to the so-called laws of supply and demand.
Consumers of oil and gasoline do not determine prices by their purchasing behavior. Instead, a handful of speculators who gamble daily on oil in the commodities-futures "market" set the price for us. Saves us the trouble, I suppose.
The bitching by conservatives over Obama's delaying of the Keystone Pipeline omits the fact that all oil transported through the proposed pipe will be made available on the open market...and priced by those same speculators. Oil flowing from Canada to Texas or the Gulf would not remain in the U.S.....and any new supply transferred would not lower gasoline prices in the U.S....not one penny.
So, by all means.....drill, drill, drill....have at it. But make no mistake.....until oil speculators are reined in, until oil gamblers have skin in their gambling game by being forced to take possession of oil
speculated upon.....no amount of domestic oil and gasoline production will bring prices down.
Once again, just like the mortgage bubble, the 1% are determining for the 99% what gasoline prices should be. The Divine Hand of the 1%. What would we do without their Divine guidance?