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Wed March 21, 2012
Don't believe the hype; gas prices not linked to domestic drilling
A new analysis by the Associated Press found no correlation between domestic oil drilling and gas prices in the U.S.
So this famous line will get you applause...
... but it won't get you lower gas prices.
"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.
And it's not just Republicans who make these kind of claims.
Placing blame for high gas prices is low-hanging, point-scoring fruit for any politician.
The Associated Press points out that on the campaign trail in 2008, then presidential candidate Sen. Barack Obama said "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."
He's not blaming the White House occupant these days.
The Associated Press' Seth Borenstein and Jack Gillum wrote "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.
High gas prices, rather, are mostly affected by crude oil prices. And crude oil is a global commodity with many factors affecting its price. For more on what influences crude oil prices, you can check out the Energy Information Administration's page.
And we also noted awhile back that Michigan's prices tend to be higher than the U.S. average. One reason for that is because Michigan is at the end of a major pipeline system, as Brian Short noted:
Cross-country transport of the product can raise costs. And since Michigan is at the end of the delivery system, transportation costs are higher than they are for states positioned closer to the gulf coast, where much of America’s imported and domestic oil production enters the continental U.S.