Wednesday, February 22, 2012
The "drill baby, drill" fallacy
With gas prices already at record highs for this time of year and the likelihood of $5 or even $6 a gallon gas this summer, republicans are demanding that the US "drill baby, drill!", but would more domestic oil production do anything to lower prices at the pump? The answer is, no.
When Exxon/Mobile, Shell, ConocoPhillips, or any other US-owned oil company pumps oil, they sell it where they can get the highest price, that is unless republicans plan to nationalize the oil companies. In this case that's the world market. Since our meager contribution to the world pot would be tiny, the change in prices at the pump would be practically zero.
But Ed, you point out, why can't the US owned oil companies just sell their oil directly to American refineries?
Because to do that would mean even higher prices at the pump for American consumers. It costs huge amounts of money and time to pump the first drop of oil and to recover those costs means selling where they can get the highest price....the world market. In order to recover those costs would mean charging ridiculous prices at the pump here.
We should be drilling alright, but we should make the refining process and costs associated with production low enough so that oil recovered domestically could be refined domestically and not have to be dumped into the world pot first. But that won't happen.....so get used to paying high prices and stop whining about drilling for more oil, it won't help at all.