Fight rising prices

More exploration, conservation can ease pain at the pump

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We received a letter recently from one of our regular readers, encouraging everyone to organize a boycott of gas stations each Wednesday. One-time boycotts don’t work, he says, but refusing to fill up on the same day each week “will directly affect the price per barrel of oil; thus, the price of gasoline will also fall.”

That won’t work, either. We’ll tell you why in a minute.

But we shared that letter to show just one local example of some people’s thought process on gas prices – that if we ratchet up domestic oil drilling everywhere, the price of gasoline in the United States will instantly drop.

It’s not nearly that simple. Oil-producing nations determine the output of oil, then the laws of supply and demand kick in when the crude flows into the free market. There are a lot of moving parts in the way gas prices rise and fall.

But America absolutely has to expand its opportunities for domestic drilling if our country is going to meaningfully increase its energy independence.

You won’t hear that from President Obama, though, who often drops this erroneous line in his speeches on energy: “We’ve got 2 percent of the world oil reserves. We use 20 percent.”

He’s only technically correct. Want to know why we have only 2 percent? Because Obama is just talking about “proven” reserves, according to the nonprofit, industry-supported Institute for Energy Research. He isn’t also counting the untapped reserves under American soil.

If you include what’s referred to as “technically recoverable” energy, estimates even from federal agencies increase our country’s reserves from 10 to 60 times Obama’s stated amount.

Meanwhile, the president cynically stumped in Oklahoma last week to tell all who could hear how much he supported the Keystone oil pipeline he so vehemently opposed just a few months ago. Of course, he just wants to expedite construction of the southern leg of the pipeline – not the northern leg that would bring between 500,000 to 700,000 barrels a day from Canada.

The left’s anti-oil energy strategy is laughably unrealistic. Certainly we need to develop alternative energy sources at affordable prices. Of course, we have no idea if Obama’s algae-as-biofuel proposal could ever leap from the pages of science fiction into sustainable reality. But America’s motorists can’t stop driving to work while waiting for that to happen.

For now, the world runs on oil. This continent has it. And we need to go get it.

But back to our letter writer’s “boycott” idea. It won’t work because it’s not really a boycott. The drivers who don’t fill up each Wednesday will simply fill up each Thursday instead. They’re using the same amount of gas, which doesn’t hurt the oil companies at all. Big Oil still gets its money from you – just on a different day.

Now, if every driver conserved gas, using less of it, and maybe improved maintenance on their cars to improve mileage – that would send a message.

Comments (43) Add comment
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robaroo
674
Points
robaroo 03/25/12 - 11:17 pm
10
1
Did you pass 5th grade math?

Did you pass 5th grade math? Good, you know enough to understand just what a red herring the oil debates are.

The US produces 10% of the worlds oil. Let's say we can increase our own production by a whopping 20%.

20% of 10 is just 2%. That means we increased the world's production by a little under 2%. The oil producing countries of the Middle East can reduce their production to fix that without blinking.

In other words, no amount of increases in American oil production can have a significant affect on world oil prices. Any politician who promises $2 gasoline is just blowing smoke.

ultrarnr
896
Points
ultrarnr 03/25/12 - 11:44 pm
9
2
If the entire Keystone
Unpublished

If the entire Keystone pipeline is built the oil will flow to a tas free zone in Houston for export to China and other Asian countries. So Keystone equals no increase in oil for the U.S. The truth is that no matter how much we drill it will have minimalimpact on gas prices. Anyone who promises otherwise is just plain lying. Increased drilling does enhance oil company profits.

allhans
23240
Points
allhans 03/25/12 - 11:46 pm
1
5
You have to start somewhere

You have to start somewhere which is what Obama was told 3 years ago when he cut back on drilling.

itsanotherday1
40159
Points
itsanotherday1 03/26/12 - 02:02 am
7
0
My friends don't want to hear

My friends don't want to hear it, but the only way we can use domestic production for domestic consumption is to have a government owned oil company. No true conservative wants that, so we need to accept we are in a global economy with global price influences. Oil fron U.S. sources are sold on the open market just like those form the Middle East. As the largest consumer of oil in the world, our best influence on price is to use less and reduce demand. Lower prices will follow.

carcraft
24147
Points
carcraft 03/26/12 - 05:38 am
3
4
Well Obama just lies about

Well Obama just lies about American energy and the lower section of the Keystone pipleline he favors. Obama stated I will expedite it. Obama has nothing to he can do to expedite it. One permit from the Army Corp of engineers is required to be issued in 60 days. The builders of the pipe line say it is on schdule and nothing Obbma does can change the schedule. America has vast amounts of energy and the Obama administration has done every thing it can to slow or stop recovery of American oil from cutting permits for off shore drilling and exploration on federal land. The Obama administration has even lied about the recomendations given by it's own science panel after the gulf spill to stop issueing permits. Then the Obama administration had to get ordered several times to issue permits. Obama had the audacity of a dope to go to Brazil and say"We want to be your best customer". Why not make America America's best customer?

carcraft
24147
Points
carcraft 03/26/12 - 05:28 am
3
3
itsanother day- If America

itsanother day- If America and Canada had stable steady production and distribution some of the wide swings in oil prices would stop. It is the uncertainty of the Middle East and orther large producers of oil that make the oil market unstable. America may well have more oil than Saudi Arabia!

carcraft
24147
Points
carcraft 03/26/12 - 05:55 am
1
2
The other issue we face is

The other issue we face is the fact that oil refineries in the US are closing due to uncertainty about future EPA regulations of refineries http://news.investors.com/article/605348/201203221853/epa-partly-to-blam... and the government requiring increased concentrations of more costly bio fuels such as ethanol cutting ten to fifteen percent of US gasoline consumption. The current distribution network makes it difficult for Northeastern refineries to stay open because of the increased cost of getting oil to them. Increasing exports of refined oil products may actually decrease cost of heating oil etc in the northeast since they can then make it profitable to stay open. Don't forget both Obama and Chu (Obama's energy secratary) want higher gas prices and both have so stated! http://www.moneynews.com/StreetTalk/Gasoline-prices-oil-refinery/2012/01... Note the US can not compete against NEW Refineries being built. The last US refinery was built I believe in the 1980,s. http://www.gasandoil.com/news/n_america/dc6ec5aa6f7a9b91b732d6447d4c0265

Techfan
6461
Points
Techfan 03/26/12 - 06:01 am
4
4
Some of the east coast

Some of the east coast refineries are closing: 1. Because they're not profitable. 2. They want to sell and can't find a buyer (imagine not wanting to buy an unprofitable business). This being said, US refining capacity is at the highest it's been in roughly the last 3 decades.

Techfan
6461
Points
Techfan 03/26/12 - 06:28 am
4
4
Investors Business Daily is

Investors Business Daily is as unreliable as you can get as a source (ask Stephen Hawking).
Moneynews is a branch of Newsmax, again as unreliable (and slanted) as you can get.
Gasandoil.com is Alexander’s Gas Oil Connections????? A guy who posts links from other sources. The article linked by car is again from Investors Business Daily.
Using such slanted, biased, and unreliable sources, explains how such erroneous opinions are formed.

Rhetor
978
Points
Rhetor 03/26/12 - 06:29 am
5
3
The President never

The President never "vehemently opposed" the Keystone project. His consistent position has been to complete the environmental impact and other studies before approving the project. He asked for a few more months to have this done. For political reasons, the Republicans pushed him to make a premature decision, so he put the project on hold at the time. That certainly does not count as vehement opposition.

Fundamental_Arminian
1833
Points
Fundamental_Arminian 03/26/12 - 06:34 am
2
3
Techfan, what does Stephen

Techfan, what does Stephen Hawking know about investing? Do you have any links to some portfolios he's recommended?

IBD is a great resource, and the investment subscriber services run by Moneynews have been doing well, especially The Dividend Machine.

Carcraft has offered some good evidence showing that our president's policies are partly to blame for our rising gas prices. It wouldn't surprise me if the president wanted to cripple our oil refineries in order to nationalize them.

Techfan
6461
Points
Techfan 03/26/12 - 06:38 am
3
0
Google it.

Google it.

Fundamental_Arminian
1833
Points
Fundamental_Arminian 03/26/12 - 06:39 am
2
4
Rhetor, do you think our

Rhetor, do you think our president's main concern is the Keystone project's environmental impact? The alternative, rail transportation, is riskier. As our president knows, however, use of railroads is especially profitable for Warren Buffett now that his company, Berkshire Hathaway, owns Burlington Northern. As a major Obama supporter, Buffett has paid to play.

Techfan
6461
Points
Techfan 03/26/12 - 06:47 am
4
2
Again, if you base your

Again, if you base your opinions on flawed and biased sources, ie. Newsmax, IBD, WorldNetDaily, etc., they will be as flawed and biased as the source. The only trustworthy part of IBD is the stock quotes section.

Techfan
6461
Points
Techfan 03/26/12 - 06:54 am
3
1
It's all in how you present

It's all in how you present it. Headline: Foreign company intends to force US landowners to sell using the power of eminent domain to ship its products to Europe and Asia. The Tea Partiers would be up in arms.

Riverman1
79307
Points
Riverman1 03/26/12 - 07:05 am
2
1
Stephen Hawking spends his

Stephen Hawking spends his time at strip clubs. I wonder how that fits in with his pondering of the economy and the universe? What's those dark things in space that capture all matter?

Riverman1
79307
Points
Riverman1 03/26/12 - 07:08 am
1
5
Matters like these when

Matters like these when Democrats try to blame slow oil production on the Republicans or increases in the debt are kind of funny. The worst times with Republicans running up the debt or having policies to slow down oil production would be magnified ten times over if Democrats were in charge. Some things are just givens, a constant.

Techfan
6461
Points
Techfan 03/26/12 - 07:31 am
3
1
More power to him. He's not

More power to him. He's not dead thanks to the National Health Service (much to the chagrin of Investors Business Daily).

Riverman1
79307
Points
Riverman1 03/26/12 - 07:36 am
0
0
I read something once kind of

I read something once kind of interesting about Hawking before his strip club interest surfaced. He was at a big conference where there were also sales reps of some kind present. There was a nice looking woman sales rep in this hotel club with music and Hawking rolled in. Everyone was dancing and he asked to "dance" with her. She said she did and he kind of rolled his chair around with her to the music. Like you say, more power to him.

pearlthesquirrel
786
Points
pearlthesquirrel 03/26/12 - 07:49 am
5
0
I submit and I quote: "Now,
Unpublished

I submit and I quote: "Now, if every driver conserved gas, using less of it, and maybe improved maintenance on their cars to improve mileage - that would send a message." Golly gee whiz, that sounds like what I was saying this weekend that so many people were disagreeing with me about - remember? I said it was't the 10, 12, or 15 mpg vehicles that were killing us, it was the voluminous amount of miles "we the people" put on our vehicles. A miracle has occurred - two factions with usually antipodal points (pearlthesquirrel and The Chronicle - er, The Bible 2.0) seem to agree on this one. Interesting.
Oh, and let's not forget........there were no takers on my "push your chips to the center of the Las Vegas casino bet" that I laid down over the weekend - again, interesting.
99 cent gas will be available if you DRASTICALLY decrease the amount of miles you drive......oh, that's right, I forgot, this is America - the country where people refuse to listen to common sense. Enjoy your $4 and $5 a gallon gas....beacuse I don't and I didn't cause it!
As always........................peace out!

Techfan
6461
Points
Techfan 03/26/12 - 07:50 am
3
1
1% of the population has

1% of the population has received approximately 60% of the income growth since 1979, yet the tax rate for this group has decreased 50%. In other words, revenues on this growth have remained roughly what they would have been over 3 decades ago.

Techfan
6461
Points
Techfan 03/26/12 - 07:56 am
7
1
Require people who bid on oil

Require people who bid on oil futures to actually have the ability to take possession of the oil.

Riverman1
79307
Points
Riverman1 03/26/12 - 08:01 am
2
1
Techfan, require people who

Techfan, require people who bid on pork belly futures to actually hang them up in their kitchens.

Techfan
6461
Points
Techfan 03/26/12 - 08:03 am
3
1
That sounds good too. Hope

That sounds good too. Hope they like bacon.

Techfan
6461
Points
Techfan 03/26/12 - 08:04 am
3
1
Folger's and tap for me.

Folger's and tap for me.

Little Lamb
43827
Points
Little Lamb 03/26/12 - 08:10 am
3
2
That's a good one, RM. I

That's a good one, RM. I suppose we must also require those who bid on corn or soybean futures to actually have a big silo and grain elevator in their back yards and be situated by a rail line.

carcraft
24147
Points
carcraft 03/26/12 - 09:25 am
1
1
Yes, but does Denmark hit

Yes, but does Denmark hit harder than Norway?

carcraft
24147
Points
carcraft 03/26/12 - 09:28 am
1
1
Is Denmark a closer Ally than

Is Denmark a closer Ally than the Philippines?

dichotomy
30514
Points
dichotomy 03/26/12 - 09:29 am
2
2
Argue all you want, but it is

Argue all you want, but it is the law of supply and demand. But included in the "supply and demand" is also the threat of geopolitical disruptions. Increased domestic supply and a supply free from geopolitical disruption such as the Canadian pipeline will certainly bring down the price of gasoline.And for the naysayers I say okay, you don't think it will have an impact, so let's try it and see. Whether it works or not we have nothing to lose by trying it. If you disagree with increased domestic supply then your argument is strictly ideological since there is nothing to lose by trying it. All exploration, the pipeline, all of it will be paid for by private money so lets do it and prove the argument one way or another.

The reason we are not doing all of these things to increase the domestic supply is that the greenie weenie liberals fear that it WILL bring down the cost of gasoline. And that goes dead against their ideology. There is no logical reason for not doing them except ideology. It's easy to sit out there and argue that it won't have an impact when you block any way to prove things one way or another. Just do it and we will see what happens. My guess is gas would drop to $2.50 simply on the announcement that we are opening new federal lands for drilling and approving the Canadian pipeline. All of the people who argue global market, etc. are ignoring the $1.00 a gallon fear factor of a supply disruption to the U.S. It costs the taxpayer nothing to find out for sure if increased domestic supply works. The ideologues don't want you to find out. Just get in line to pick up your government subsidized solar panel and 2 AA batteries.

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