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Letter to the editor:

More drilling won’t lower gas prices

Wed, Apr 11, 2012 (2 a.m.)

Here we go again. Drill, drill, drill for more oil. Blame the president for the high prices. Let’s end the welfare tax subsidy for the oil giants. Has anyone heard an oil company executive say, “Let us drill more and the price of gas will come down $2 a gallon, or $1.50 or $1 or 25 cents or even 5 cents”?

No.

As for the big pipeline across the United States, I worked for a major oil company in the product development lab in the late 1950s. We worked to extrude the product from oil sands. It’s quite an expensive process.

If it was an easy or cheap way to do the extraction, why not build the facility in Canada to extract the product from the slurry that will run through the pipeline? Remember the oil mess in the Gulf of Mexico?

Do we want this in the middle of the country?

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Discussion: 58 comments so far…

  1. This letter is a crock!The drilling for and production of more oil will add to the overall supply of oil on the global market relative to demand and by elementary enonomics the overall price of oil would come down.The problem is that there is a president who believes that higher gasoline prices will make the higher cost of green energy more attractive, and therefore, he intentionally pushes back on incresed oil production from government owned lands.His green energy policy is anachronistic. It does not belong to an era in which society is fueled by and deeply relies on hydrcarbons as a primary fuel source. As is common, Obama's policies undermine and damage both the Americal economy and the household consumer.

  2. First, let's rid ourselves of the notion that oil companies share our objective of lowering the price of gasoline. They do not! Oil is not a perishable commodity and if the price of oil drops too much, oil companies pump less out of the ground and quit drilling for more. Second, the price of oil is not determined by how many of us drive up to gas pumps and how much we buy. It is determined by the demand for futures contracts on New York Mercantile Exchange, the only situation where the laws of supply and demand apply and that is the supply and demand for contracts - not oil.
    Third there's OPEC which controls about 20% of world production and can adjust that production to suit their price objectives.

    So anyone that lectures about "elementary economics" does not really understand today's reality or is still living in the 1970's.

  3. Anyone who maintains that relative supply and demand on the global market does not drive the final price of energy, needs a course in ECON 101.

  4. Jim Weber,

    If what you say was true and the only factors involved in the price of oil, the prices would always go only one way...up! The history of oil prices shows they go up and down. Sorry, but this is another case of backwards logic.... I don't like oil....I don't want any more exploration... therefore I will 'invent' some reasons why more production cannot have any effect in reducing oil prices.

    Terribly flawed logic. Proper logic dictates that you look at facts, then draw a conclusion according to the facts you find..... not draw a conclusion you favor and then cherry pick information you can use to buttrice your previously drawn conclusion.

    Michael

  5. We have been having these same arguements for 40 maybe 50 years about oil prices. Nothing has changed except for oil companies profits which have increased over all these past years. As long as Americans are willing to pay at the pump expect the same arguements for another 40-50 years.

  6. Mr. Karley,

    Your letter indicates you are quite ignorant of the basics of economics. Not only will more drilling (supply) cause the price to fall, the HINT of more drilling will cause the price to fall. Unfortunately for us all, wrong-headed analyses such as yours is prevalent.

    Purgatory

  7. Mr. Weber,

    Other than correctly stating that oil companies don't wish to lower the price of their product, the rest of your statements are simply wrong and ignorant. You would like us to believe that most producers are bound by economic truths, but some (OPEC) are not. Typical illogical thinking from a Pisces.

    Purgatory

  8. Sigh. Once again I will post a link to a factual report that explains why conservatives remain clueless.

    http://www.sciencedaily.com/releases/201...
    "The "tipping point" for oil supply appears to have occurred around 2005, says Murray, who compared world crude oil production with world prices going back to 1998. Before 2005, supply of regular crude oil was elastic and increased in response to price increases. Since then, production appears to have hit a wall at 75 million barrels per day in spite of price increases of 15 percent each year.
    "As a result, prices swing wildly in response to small changes in demand," the co-authors wrote. "Others have remarked on this step change in the economies of oil around the year 2005, but the point needs to be lodged more firmly in the minds of policy makers."
    For those who argue that oil reserves have been increasing, that more crude oil will be available in the future, the co-authors wrote: "The true volume of global proved reserves is clouded by secrecy; forecasts by state oil companies are not audited and appear to be exaggerated. More importantly, reserves often take 6 -- 10 years to drill and develop before they become part of the supply, by which time older fields have become depleted."
    Production at oil fields around the world is declining between 4.5 percent and 6.7 percent per year, they wrote."

  9. Michael - What direction have prices gone as a long-term trend? Sure, there are some seasonal variations. Certainly oil companies could not instantaneously control the effects of the 2008 financial crisis but their reaction and price recovery was much swifter than the overall economic recovery.

  10. When I took ECON 101 we learned you could increase the price of a product by expanding the demand for it or pinching the supply.

  11. You learned it right in Econ 101. What is needed now is for domestic drilling and production to push the supply curve out to another higher level relative to demand.This will cause the price to fall( for the S curve to intersect the D curve at a lower price). Also, major Oil companies are part of an oligopoly with a competitive fringe. Of course they want more profit. Greed is an instinctive part of the capitalistic system. But we buyers are also greedy, seeking the lowest price possible. Competition is the best regulating factor. That's why OPEC's cartel needs to be confronted by increased production competition in the global market. The smaller their production becomes percentage wise in the global market, the less influence the Cartel commands.

  12. RedRocky sez "Bush simply indicated his administration would increase supply - and $4.00 gas became $1.75 when Bush 43 left office."

    Is rhis some sort of parallell universe? The only thing GW did to increase the supply of gas was leave several million people with no further need to drive to work.

  13. mschaffer(Mark Schaffer),

    Good link you posted @6:43am. Unfortunately you are trying to debate with people who no longer believe in science.

    "Many conservatives, particularly those who are clearly authoritarians, are not aware of their illogical, contradictory, and hypocritical thinking. If made cognizant of it, they either rationalize it away, neglect to care, or attack those who reveal their human weaknesses. Because such thinking seems to be a reality of contemporary conservatism, anyone operating from a logical mind or has the inclination toward a reasoned judgment will have a problem with this." - John Dean "Conservatives Without Conscience"

    Chris Mooney:

    Conservatism is a Defensive Ideology, and Appeals to People Who Want Certainty and Resist Change.

    There's now a staggering amount of research on the psychological and even the physiological traits of people who opt for conservative ideologies. And on average, you see people who are more wedded to certainty, and to having fixed beliefs. You also see people who are more sensitive to fear and threat -- in a way that can be measured in their bodily responses to certain types of stimuli.

    At the extreme of these traits, you see a group called authoritarians -- those who are characterized by cognitive rigidity, seeing things in black and white ways -- "in group/out group," my way or the highway.

    So in this case, if someone high on such traits latches on to a particular belief -- in this case, "global warming is a hoax" -- then more knowledge about it is not necessarily going to open their minds. More knowledge is just going to be used to argue what they already think.

    And we see this in the Tea Party, where we have both the highest levels of global warming denial, but also this incredibly strong confidence that they know all they need to know about the issue, and they don't want any more information, thank you very much.

    Fox News is the Key "Feedback Mechanism" -- whereby people who want to believe false things get all the license they need.

    So clearly, there are some deeply rooted attributes that predispose conservatives towards the denial of global warming.

    But there are also "environmental" factors -- things that have come to exist in our world that did not exist before, that interact with these things about conservatives, and make all this much worse.

    And here, Fox News is undeniably at the top of the list. There are now a host of studies (video here) showing that Fox News viewers are more misinformed about various aspects of reality, including two such studies about global warming.

    So if you've got Fox News, you've got a place to go to reaffirm your beliefs. And that serves this psychological need for certainty and security. So conservatives opt in, they get the misinformation, their beliefs are reaffirmed, and they're set to argue, argue, argue about why they're right and all the scientists of the world are wrong.

  14. To my socialist friends. If more drilling here will not lower prices because of increased US inventory, how does the liberal mantra of conserve conserve work to reduce prices? It produces the very same effect. The only difference I see is that we get to reap the financial benefits instead of countries whose people want to kill us. We are still many decades from developing a meaningful alternitive to fossel fuel. Yes, meaningful, not a trillion windmills and 10 trillion cheap Chinese solar panels.

  15. If the mopes on the left are correct in their ignorant assessment that greater supply doesn't reduce prices how do they explain Winco's opening just 2 grocery stores in the LV Valley immediately caused their competitors to reevaluate the prices on their shelves and to match Winco's lower prices? Of course, to the economically functional illiterates, it was just a coincidence. But the truth is that's exactly the way the free enterprise system with unfetterd competiton works. Oops, was supposed to work until the leftists and their top-down management began interfering in the market place when "progressives" threw roadblocks in the way by instituting red tape, rules & regulations in order to pursue their agenda of creating a "Workers Paradise" in the USA. Yeah, bring on Stalin, Mao & Fidel. What they wrought brought such great times to the peons they peed on. Not so much! They brought a loss of liberty, stifling poverty, wide spread starvation and untold misery to the masses along with a cruel & sadistic style of governing. That may suit the elites at the top of the "progressive" food chain, but isn't so wonderful for those at the bottom!

  16. Vernos,

    Of course there are Conservatives that are not open to new evidence, just like there are Liberals who are not.

    You're pushing a broad brush indictment of nearly every Conservative out there. That is no more fair or accurate than when Conservatives try the same broad brush technique against Liberals.

    Quotes and studies and people's opinion do not make something so. On both sides we have too many people cemented into a position, unwilling to consider new information and unwilling to compromise. As long as people on both sides, as well as yourself, continue to push this false narrative, it just makes the problem worse. Stuff like this will never cause one side or the other to go 'wow, we've just been totally wrong about everything'. All it does, on both sides, is just harden the cement.

    Michael

  17. There are some, (but very few) people that write and argue that producing more oil will just delay the day when green energy will power the world. They happily declare their willingness to pay higher prices for energy and suffer any other consequence of trying to 'force' a changeover quickly.

    They are the same as the people who will admit that global warming may indeed be caused by fossil fuels but are willing to keep using fossil fuels and take their chances on how bad the effects will be and when they will strike.

    I have respect for (but don't always agree with) both groups and their views because they are honest views and both recognize that their preferred course may have some unknown and possibly disasterous consequences. They are willing to roll the dice and accept the consequences.

    The group that it is hard for me to respect is the group that argues that increased oil production in North America cannot possibly put ANY downward pressure on oil prices. To me, these people belong to the group that wants to 'force' a change away from fossil fuels, but just don't have the guts to admit what the first group will admit.... IE .... they don't care if more exploration could drive down the costs of gas. They want green energy and if new oil exploration would retard that happening, they are against it.

    To those people, I say.... just admit what you really want, why you want it and that you are OK with whatever consequences come from trying to 'force' the switch from fossil to green energy.

    Michael

  18. RefNV - "Vernos wants us to believe the words of a "Master manipulator"."

    A Neo Con who watched his party fall of the planet of sanity. It is a very clear warning of how far the party has moved when you get people like Pat Robertson complaining about the GOP debates.

    The facts are, oil production is up in the USA, and consumption is down. As far as oil pricing you can not rely on supply and demand as a model. Prices are reflected on international markets parallel to what pricing happens here. Speculators are driving the price of oil up and everyone knows it, whether or not you care to admit it.

  19. Dennis,

    This rediculous, monolithic claim that all Liberals are stupid and bad or that all Conservatives are stupid and bad is ...... wrong on its face, destructive to any chance for compromise, and does the exact opposite of what many that spout it (including Vernos) would like to see happen.

    In WWII, we were viewed in this monolithic style by the Japanese and we viewed them the same way. The only resolution came after we nearly annihilated the Japanese. Then we both discovered over time that these monolithic views on both sides were terribly inaccurate.

    We've now created and continue to foster this same stupid monolithic view in our own politics. Do we really want this 'war' to continue while our country declines? I think not.

    Everyone should think twice about what they post and the corrosive effects it has on our society and our nation. I don't intend to single out Vernos because he is only one of many that do this, but the fact remains that it does 'nothing' to push us forward and just works to push us backward.

    Michael

  20. Simply amazing how trolls beat to the same old drumbeat, oh no tell me it isn't so".

    Moran's, when you're able to think for yourselves and stop relying on the main stream media and your liberal leaders, you'd be amazed how much better life would be and the lies they've fed to their mindless trolls for years. You've been brainwashed into thinking and where most really believe, too stupid to think for themselves where you honestly believe in their entitlements.

    News flash, more oil, supply chain increases, prices plunge!

  21. Let me remind you that in the summer of 2008. W was in office. Gas was at $5/gallon. I saw a guy put his SUV on fire at Lake Mead.

  22. How can more drilling have any effect on price when we only have 5% of oil reserves ?

  23. Oil is not an efficient free market. OPEC colludes to fix prices, and there is nothing anybody can do about it.

    Any excess domestic production will be sold overseas. We are currently exporting gasoline because we have excess refining capacity. The same thing would happen if we had excess oil.

    The price of oil will pretty much always be what OPEC manipulates it to be.

    The biggest reasons that oil companies are pushing for keystone XL is that there is a lot of oil that can't make it out of the midwest, so it sells at a 20% discount. When the southern part of keystone is completed and oil from the midwest can travel via pipeline to the gulf, the price of gas in the midwest will go up, not down. The price of oil on the world market will remain unchanged unless OPEC wants it to change.

    wtplv- your arguments are much to sane and reasonable for this group :)

  24. If more U.S. oil production will make the price of gas go down why is the price up since we are producing more crude now then we did in 2008?

    You can see the stats here: http://www.eia.gov/dnav/pet/hist/LeafHan...

    Crude is a world market and the U.S. produces a small amount of that market. The president does not control the cost of oil/gas.

  25. Dennis,

    Admittedly, there are many turnips out there. I would include in that group all the people that believe that all the financial problems this country faces are the result of one party, one ideology, one label, etc. and that one party, one ideology or one label will fix them all.

    We have far too many politicians (party is irrelevant) that want to get into office and those presently in office that want to stay there. They mollify the voting public by offering benefits that are not paid for. They invoke class envy. They obtain the money and support they need to run for or retain office by doing the bidding of powerful interests with money and lobbyists.

    As long as we allow that to continue, no matter which party we happen to favor, we are all turnips.

    Michael

  26. Vegaslee,

    Another example of picking a conclusion, but ignoring facts that contrdict that conclusion. See below...

    After falling 1.5 percent from 2008 to 2009, global oil consumption soared to an all-time high of 87.4 million barrels per day in 2010, according to the online Vital Signs report published by Worldwatch Institute. The 3.1 percent increase in consumption in 2010 easily makes up for the decline between 2008 and 2009 caused by the global economic crisis.

    Yes, US oil production is up but global consumption is up much more and it keeps rising.

    Before you draw a conclusion, do some research. Combine global tensions with higher demand and consumption and it has to be part of the explanation for higher gas prices.

    Michael

  27. Carmine, The difference between other companies and oil companies. Is we have a choice of purchasing goods and services from other companies. Oil companies have us in a must buy situation, if you want to get to work so you can feed your family. Pity for oil companies and their huge profits I don't have.

  28. Mr.Casler most of our problems can indeed be placed squareley on the free market, no taxes, no regulation Ayn Rand devotees.The enemy of the country is Conservativism itself.

  29. Joe,

    You sound reasonable. I believe many Americans support the development of green energy and are willing to pay some extra while it scales. I am one of those people. I also believe that on our little blue planet that operates almost completely on fossil fuels, the changeover has to happen over a long time period and we need to keep developing and using fossil fuels in as ecological responsible sense as possible. I am sorry that we have so many on both sides that cannot and will not see that compromise here, as elsewhere is essential.

    Michael

  30. At least now something is Obamas' fault!

    Maybe the heavy tar sands oil is refined better in the warmer climate states, but building new refineries should be priority as the letter writer states, maybe Obama could lend some billions to build one in ND?
    There is no mess in the Gulf of Mexico because of the warm waters and natural parasites the oil got "eaten up" as does much of the oil that naturaly spews from underground sources in the gulf. I agree, drill drill drill!

  31. Michael Kelley,

    In my opinion, you should join Mark Schaffer and ask yourself why you reside in America. The Free Market is one of the principals this country was founded on. Regulation and government are necessary in a free market economy, but if you honestly believe the Free Market is the cause of all our problems, you are just living in the wrong country.

    I always knew there were a pew people like you and Mark in America, but I certainly hope there are only a few of you.

    Michael

  32. The rate of climate change is accelerating. According to NOAA at:

    http://www.ncdc.noaa.gov/sotc/

    more than 15,000 warm temperature records were broken in this month of March.

    From that page: "The average temperature of 51.1F was 8.6 degrees above the 20th century average for March and 0.5F warmer than the previous warmest March in 1910."

    Also, "there were 15,272 warm temperature records broken (7,755 daytime records, 7,517 nighttime records)." A large part of the temperature increases are attributed to rising carbon dioxide from the burning of fossil fuels.

    CO2 absorbed into water causes acidification of that water. According to a recent article in Science Magazine, the "Pace of Ocean Acidification Has No Parallel in 300 Million Years".

    http://www.sciencemag.org/content/335/60...

    Ice core extractions in Greenland and Antarctica have shown that 75% of the CO2 increases in the atmosphere have come during the past 60 years or less. The Glaciers on both continents are disappearing at an accelerated pace, as measured by many researchers (see "Extreme ICE", a NOVA production on DVD about James Balog, a photojournalist documenting this subject with time lapse cameras.)

    Ocean acidification occurs when higher levels of CO2 are absorbed into the ocean water. The destructive effects of that acidification AND temperature rise of the water are being measured as coral reefs disappear.

    Ocean acidification and temperature increases lag behind CO2 levels. Therefore acidification will continue to increase even if the CO2 levels remain constant but in fact they are increasing rapidly.

    There is absolutely NO question that fossil fuels are at the heart of atmospheric CO2 increases, along with resulting temperature and rainfall changes.

    To lower the price of fuel, it is more important to insist and buy high and very high mileage vehicles. More drilling is the most destructive activity imaginable, and it will NEVER lower the price of gas.

    Those who continue to say that climate change is not happening and global warming is a hoax are repeating the dogmatic nonsense in the darkest of minds who would do anything for a buck, including destroy themselves. They deserve the Darwin award sequences, something very similar to the Real Hunger Games to come.

  33. Mr. Schaffer,

    You referred to this statement, "Since then, production appears to have hit a wall at 75 million barrels per day in spite of price increases of 15 percent each year" to make some illogical point.

    I assume that you are aware that you made the case for more production and the consequent lowering of prices.

    Quite a strange comment you have made, Mr. Schaffer.

    Purgatory

  34. Ahhh....nothing has changed. Frank Simmons is still delusional and wanting us to drive coal powered cars. And then there are the looney climate change wackos. Hey wackos, the climate has been changing for 4.6 billion years and will continue to do so after earth is no longer habitable for our species. And there's not a DARN thing you can do about it (except pray).

    These same people who refuse to believe that the entire earth was once covered in a sheet of ice a mile thick.

  35. @airweare,

    The scene in Matrix concerning the human virus keeps coming to mind.

  36. The Culprit in Oil Prices is Oil Speculators. Go back and look at the Money Quantitative Easing put into the Economy and you'll see why all this money is chasing commodities and driving up all sorts of commodity prices. It's flat out Gambling by Goldman Sachs and others on Americas Future.

    Oil Companies Should not receive Welfare. Immature Industries (Solar,Geothermal,Algae,Ocean Waves/Currents and Wind) should be subsidized to make them Competitive with existing energy. After all a Breakthrough in ANY of these energy fields would make us Energy Independent and provide the ability to save Billions from Military Spending where they are needed to secure the Oil Flow.

  37. Ya gotta love the nattering nabobs who comment on "Economics" and "supply and demand" as the only factors in pricing.

    Oil pricing is dominated by a Cartel -- OPEC -- which sets prices. None of the other major producers has any incentive to break the cartel price because almost all of them use higher prices to fund governmental activities. (For example, Iran uses its' profits to build nuclear weapons). So the price stays high.

    Now if no one was using oil at all, the price might fall -- if OPEC did not cut back production. But with more people in the world able to buy cars, the demand for gasoline is growing faster than improved fuel economy standards and high prices can shrink demand.

    Then there is the little matter of speculation. We have allowed prices to be set by reference to a market which is linked only to promises rather than to actual physical oil. This can result in a disconnect between the volume of promises and the physical inventory of oil. Some have estimated this disconnect to be as much as 40% of the current "oil price" -- but since trades in these promises cannot be marked to actual physical trades in a free market (that pesky Cartel pricing, again), that may be either a wild overstatement or understatement.

    Just as meth addiction shows in the mouth, oil addiction shows up in our environment. We are oil junkies, burning 70% of what we extract locally and import in our cars. And we are killing ourselves just like crack whores and meth junkies. Because we are addicted, we will say and do anything for it. We just sound rational to ourselves -- but we are addicts and not to be believed or trusted.

  38. Purgatory has no understanding of the article I linked to. The simple fact is that supply of a finite resource will, by definition, run out and no matter how much you shout "drill blah blah blah" it will not change that fact. The most effective way to stretch a supply of a finite resource is through efficiency and conservation. In parallel you must switch to a different but equivalent resource before reaching the other side of peak production because when you do speculators and cartels will have an outsize influence on price because demand is greater than supply and, again, that supply is finite. Capiche?

  39. There are 7 billion people in the world. It's doubled in my life time. Americans make up 5% of the world's population but we consume 25% of it's energy. It's little wonder Americans are overweight and suffer from diabetes because they drive every where.

  40. Schaffer...of course the supply is limited...your argument is completely based in that we have reached that point as of 2005...you are welcome to have your opinion, but you are factually incorrect...we logical types don't mind debating opinions with you, Vernos, Goodman, et al - however, debating facts tends to get us a bit irritated...Purgatory

  41. Purgatory, I am sorry that your assertion that my reference to actual research has fallen on deaf ears but where, other than your head, are the facts that disprove the hard work of these researchers.

    Reffy,
    Please stop babbling and try to think coherently for once in all your time posting pathetic nonsense.