Gas Prices: Markets Will Respond to Increased U.S. Oil Production
One argument Americans do NOT need to hear in today’s House debate on H.R. 1230, the Restarting American Offshore Leasing Now Act, is encouraging domestic energy production will do nothing to lower high gas prices today because, after all, it will take years for any new drilling to produce oil and gas. That old argument is just an excuse for inaction.
And it is an old argument. As Rep. Doc Hastings (R-WA) observed on a conference call with bloggers Wednesday, opponents are always saying it will take 10 years or seven years to have impact, but they were saying 10 or seven years ago. With action then, we might not have this problem.
Hastings, chairman of the House Natural Resources Committee, then dared to cite market forces in his further rebuttal:
But to me, there’s a bigger portion to this, and that is, crude oil is a global commodity and that we know. Yet we are sitting on potential reserves here that are absolutely huge, and the world knows that. And if we send a signal to the markets that we’re going to go after the resources that we have in this country … — and keep in mind, OPEC controls about 45 percent of the market — I think that will send a signal to the market that we are very, very serious about utilizing our resources, and I think that will have a positive impact on driving the price of gasoline down.
As a matter of fact, that happened in 2008, if you recall. Because there was a congressional and a presidential moratoria [on outer continental shelf drilling] in 2008 going into the gas crisis, $4 a gallon in August of that year. Both of those moratoria went away, and you know, the gas prices dropped, and I think there’s no question about that, it was because there was a signal to the market….
A lot of people say there are other factors controlling prices, and my short answer to that is, sure there are other factors. It’s called OPEC. They’re a cartel….In any sort of cartel, if you want to beat a cartel, you increase the supply of whatever that cartel is controlling. So if we send a signal that we’re going to increase the potential supply of crude oil in the world, I think the market will respond accordingly.
News coverage …
- Richmond Times-Dispatch, “Offshore-drilling bill up for vote in House“
- The Hill (blog), “OVERNIGHT ENERGY: The House offshore drilling battle begins “
- Washington Examiner, “Dems, GOP duel over energy legislation“
- Reuters, “Republicans to push US offshore drilling expansion“