Sunday, February 26, 2012

Energy Lies—X

"Drilling More Will Keep Gas Prices Low"

 ~ Consumption of gasoline in the US has been falling for years:

US EIA chart of refinery deliveries of gasoline to retailers

As a consequence, US oil refineries have increased exports:

US EIA chart of oil product exports

No surprise here. As US domestic demand falls, prices would normally drop unless supply also decreased. Were supply to increase, prices would drop even more. Instead, supply is being diverted, and prices are going up.

The market for oil and refined products is global. With demand surging in developing economies, and the price there higher, a global commodity like gasoline is sent into the global market, not kept in the US to lower prices.

So think about that the next time you hear some politician, or API apologist pointing fingers about higher gas prices. It isn't evil environmentalists or intransigent bureaucrats, it's economics, stupid.

Who makes those decisions to export? (Hint: it isn't the President.) And who thinks more oil production in the US, whether offshore, or through shale "plays" will result in greater domestic gasoline supply and lower prices? Or more exports to markets with better profit margins for refiners?

We pay less for gasoline than almost anywhere else in the industrialized world. In effect, higher gas prices over there mean higher gas prices here at home too.

Meanwhile, we are told one reason we must build the Keystone XL pipeline is to increase our energy security. How exactly does increasing foreign oil imports from Canada, refining them here, and shipping them to Mexico and elsewhere do anything for our energy security? All it does is increase profits for those processing, transporting, refining and exporting.

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