May 14, 2011
Fool or liar? That is the only question that needs to be asked of anyone saying that they want to promote domestic oil production in order to bring down the price of gas.
The simple fact is that there is not enough oil in the United States to bring down the price of gas to any noticeable degree. This is not a debatable point, the United States has 22.3 billion barrels of proven reserves. The U.S. consumes around 20 million barrels a day. This means that we could supply the country for 3 three years with domestic production.
Of course, from the standpoint of domestic oil prices what matters is the U.S. contribution to world production. This is around 90 million barrels a day. In an incredibly optimistic scenario the U.S. could increase its domestic production by 2 million barrels a day, this would increase output by a bit more than 2 percent [thanks Rogermac]. The net effect might be a reduction in price @5-6 percent. Even this price decline would take around 8-10 years to realize.
There is not much basis to dispute these basic facts. Therefore when AP reported that Doc Hastings, the Chairman of the House Natural Resources Committee, said:
“The president is finally admitting what Republicans have known all along, that increasing the supply of American energy will help lower prices and create jobs.”
It should have pointed out to readers that increasing domestic supplies will not lead to noticeable effect on prices. Readers may not have the time to discover this fact for themselves.
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