UNITED STATES NEWS

FACT CHECK: More US drilling didn’t drop gas price

Mar 21, 2012, 10:52 AM

Associated Press

WASHINGTON (AP) – It’s the political cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.

A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.

If more domestic oil drilling worked as politicians say, you’d now be paying about $2 a gallon for gasoline. Instead, you’re paying the highest prices ever for March.

Political rhetoric about the blame over gas prices and the power to change them _ whether Republican claims now or Democrats’ charges four years ago _ is not supported by cold, hard figures. And that’s especially true about oil drilling in the U.S. More oil production in the United States does not mean consistently lower prices at the pump.

Sometimes prices increase as American drilling ramps up. That’s what has happened in the past three years. Since February 2009, U.S. oil production has increased 15 percent when seasonally adjusted. Prices in those three years went from $2.07 per gallon to $3.58. It was a case of drilling more and paying much more.

U.S. oil production is back to the same level it was in March 2003, when gas cost $2.10 per gallon when adjusted for inflation. But that’s not what prices are now.

That’s because oil is a global commodity and U.S. production has only a tiny influence on supply. Factors far beyond the control of a nation or a president dictate the price of gasoline.

When you put the inflation-adjusted price of gas on the same chart as U.S. oil production since 1976, the numbers sometimes go in the same direction, sometimes in opposite directions. If drilling for more oil meant lower prices, the lines on the chart would consistently go in opposite directions. A basic statistical measure of correlation found no link between the two, and outside statistical experts confirmed those calculations.

“Drill, baby, drill has nothing to do with it,” said Judith Dwarkin, chief energy economist at ITG investment research. Two other energy economists said the same thing and experts in the field have been making that observation for decades.

The statistics directly contradict the title of GOP presidential candidate Newt Gingrich’s 2008 book “Drill Here, Drill Now, Pay Less,” as well as the campaign-trail claims from the GOP presidential candidates.

Earlier this month, GOP front-runner Mitt Romney said of his solution to higher gas prices: “I can cut through the baloney … and just tell him, `Mr. President, open up drilling in the Gulf, open up drilling in ANWR (the Arctic National Wildlife Refuge). Open up drilling in continental shelf, drill in North Dakota, drill in Oklahoma and Texas.'”

Sen. Lisa Murkowski, R-Alaska, said on the Senate floor last week, “With oil prices above $100 a barrel and gasoline soaring toward $4 a gallon, greater production is not a political opportunity, it is a legislative imperative.”

Supporters of the controversial Keystone XL pipeline say it would bring 25 million barrels of oil to the United States a month. That’s the same increase in U.S. production that occurred between February and November last year. Monthly gas prices went up a dime a gallon in that time.

The late 1980s and 1990s show exactly how domestic drilling is not related to gas prices.

Seasonally adjusted U.S. oil production dropped steadily from February 1986 until three years ago. But starting in March 1986, inflation-adjusted gas prices fell below the $2-a-gallon mark and stayed there for most of the rest of the 1980s and 1990s. Production between 1986 and 1999 dropped by nearly one-third. If the drill-now theory were correct, prices should have soared. Instead they went down by nearly a dollar.

The AP analysis used Energy Department figures for regular unleaded gas prices adjusted for inflation to 2012 dollars, oil production and oil demand. The figures go back to January 1976, the earliest the Energy Department keeps figures on unleaded gas prices. University of South Carolina statistics professor John Grego, New York University statistics professor Edward Melnick and David Peterson, a retired Duke University statistics professor, looked at the analysis, ran their own calculations, including several complicated formulas, and came to the same conclusion.

When U.S. production goes up, the price of gas “is certainly not going down,” Melnick said. “The data does not suggest that whatsoever.”

The calculations “help make the point that U.S. production and demand have little to do with the price of gasoline in the U.S., and lend support to the notion that there is not a great deal we in the U.S., acting alone, can do to affect the price of gasoline,” Peterson wrote in an email. He pointed out that Energy Department figures show that gas prices in the U.S. seem to rise and fall similarly to gas prices in Europe, showing that it has little to do with American drilling.

And that’s the key. It’s a world market, economists say.

Unlike natural gas or electricity, the United States alone does not have the power to change the supply-and-demand equation in the world oil market, said Christopher Knittel, a professor of energy economics at MIT. American oil production is about 11 percent of the world’s output, so even if the U.S. were to increase its oil production by 50 percent _ that is more than drilling in the Arctic, increased public-lands and offshore drilling, and the Canadian pipeline would provide _ it would at most cut gas prices by 10 percent.

“There are not many markets where the United States can’t impose its will on market outcomes,” Knittel said. “This is one we can’t, and it’s hard for the average American to understand that and it’s easy for politicians to feed off that.”

If drilling activity rises around the globe for a sustained period of time, gasoline prices can fall as that new supply eventually finds its way to market, but the U.S. can’t do it alone, oil analysts say.

Politicians _ especially those in the party that’s not occupying the White House _ have long harped on high gas prices when expedient. Then-Sen. Barack Obama said in 2008, when he was running for president, that “here in Ohio, you’re paying nearly $3.70 a gallon for gas, 2-1/2 times what it cost when George Bush took office.”

But Obama, who has seen gas prices go up 73 percent since he took office, was singing a different tune last week in his weekly radio address: “The truth is: The price of gas depends on a lot of factors that are often beyond our control. Unrest in the Middle East can tighten global oil supply. Growing nations like China or India adding cars to the road increases demand. But one thing we should control is fraud and manipulation that can cause prices to spike even further.”

The political party of the president doesn’t seem to matter to the price at the pump either. Since 1976, the average monthly gas price, adjusted for inflation, during Democratic presidencies has been $2.25; under Republicans it’s been $2.34. Obama had the steepest monthly average at $3.05 and Bill Clinton the cheapest at $1.68.

When Bush and running mate Dick Cheney campaigned in 2000, they argued that as oil executives they could get oil prices down, with Bush saying, `’I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply.”

Yet it was during the last few months of Bush’s term in 2008 that gas prices hit their highest: $4.27 when adjusted for inflation.

___

Associated Press writers Dina Cappiello and Matthew Daly in Washington and Jonathan Fahey in New York contributed to this report.

___

Online:

U.S. Energy Information Administration:
http://www.eia.gov/

___

Follow Seth Borenstein at
http://twitter.com/borenbears

Follow Jack Gillum at
http://twitter.com/jackgillum

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

FILE - Defendant Kevin Monahan, left, listens to opening statements in his murder trial, Jan. 11, 2...

Associated Press

Man to be sentenced for murdering a woman who was mistakenly driven up his rural New York driveway

FORT EDWARD, N.Y. (AP) — A man who fatally shot a 20-year-old woman in an SUV that was mistakenly driven up his rural driveway in upstate New York is scheduled to be sentenced Friday. Kevin Monahan, 66, was convicted of second-degree murder in the death last April of Kaylin Gillis. Gillis was riding in a […]

48 minutes ago

David and Stephanie Joiner pose by part of an artwork, called Greenwood Pond: Double Site, Sunday, ...

Associated Press

Artists outraged by removal of groundbreaking work along Des Moines pond

DES MOINES, Iowa (AP) — A Des Moines arts organization is preparing to rip out a groundbreaking artwork that lines a pond in a historic city park, surprising the New York artist who created the work decades ago and leading to an outpouring of opposition by other artists and local residents. The decision to remove […]

52 minutes ago

Associated Press

Parts of the Sierra Nevada likely to get 10 feet of snow from powerful storm by weekend

RENO, Nev. (AP) — The most powerful Pacific storm of the season is forecast to bring up to 10 feet (3 meters) of snow into the Sierra Nevada by the weekend, forcing residents to take shelter and prompting at least one Lake Tahoe ski resort to close Friday. The storm began barreling into the region […]

57 minutes ago

FILE - Paramedic Peter Cichuniec attends his arraignment at the Adams County Justice Center in Brig...

Associated Press

Paramedic convictions in Elijah McClain’s death spur changes for patients in police custody

DENVER (AP) — Medical responders across the U.S. are rethinking how they treat people in police custody after a jury last December handed down a rare decision: It convicted two Colorado paramedics for their roles in the 2019 death of Elijah McClain following an overdose of a powerful sedative. As one of the paramedics faces […]

1 hour ago

Associated Press

Some left helpless to watch as largest wildfire in Texas history devastates their town

STINNETT, Texas (AP) — As the largest wildfire in Texas history engulfed his town, Danny Phillips was left helpless. “We had to watch from a few miles away as our neighborhood burned,” he said, his voice trembling with emotion. In his hard-hit town of Stinnett, population roughly 1,600, families like his who evacuated from the […]

2 hours ago

Fulton County District Attorney Fani Willis testifies during a hearing on the Georgia election inte...

Associated Press

With salacious testimony finished, legal arguments to begin over Fani Willis’ future in Trump case

ATLANTA (AP) — After several days of extraordinary testimony, the judge in the Georgia election interference case against former President Donald Trump is set to hear arguments Friday over whether Fulton County District Attorney Fani Willis should be removed from the prosecution over a romantic relationship. Lawyers for Trump and other defendants in the election […]

2 hours ago

Sponsored Articles

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

...

Day & Night Air Conditioning, Heating and Plumbing

Valley residents should be mindful of plumbing ahead of holidays

With Halloween in the rear-view and more holidays coming up, Day & Night recommends that Valley residents prepare accordingly.

FACT CHECK: More US drilling didn’t drop gas price