No connection between drilling and pumps

Eve Troeh Mar 21, 2012

Tess Vigeland: So what is the average price of gas in the U.S. right now? $3.86 a gallon.

One thing some politicians love to say when gas prices spike: Let’s drill for more. But a new Associated Press analysis shows that historically, that doesn’t work. From the Marketplace Sustainability Desk, Eve Troeh reports.

Eve Troeh: It’s become a refrain on the Republican campaign trail: Increase oil drilling, lower gas prices.

Mitt Romney: There are a lot of people out there really suffering, having tough times right now because of these gas prices. Mr. President, open up drilling in the Gulf. Open up drilling in ANWR. Open up drilling in the Intercontinental Shelf.

That’s Mitt Romney last week on Fox News. But the Associated Press took 36 years of U.S. gas prices and lined them up next to how much oil was being pumped at the time. It found no direct relationship. Prices didn’t fall when drilling went up.

Steve Levine at the New America Foundation isn’t surprised.

Steve Levine: You can’t take U.S. drilling in a vacuum.

He says the U.S. is already drilling for oil and gas at record levels. But that crude isn’t priced by U.S. gas producers. It flows into the global market first.

Paul Sullivan at the National Defense University says even if the U.S. became a net exporter of oil, the global market would still dictate price.

Paul Sullivan: If there is a serious event in Iran, in any other major producer, in Nigeria, in Venezuela, it’s going to affect oil prices in our own country.

The industry, of course, says all the more reason to drill everywhere as much as possible. That even with global complexities, it still comes down to supply and demand.

But the timeline for steeply falling gas prices is several years, by anyone’s account. Steve Levine says anyone who promises big, near-term relief is playing with Americans’ hopes — and memories.

Levine: Most motorists alive do remember $2 gasoline, and their fears are that we’re not going back to that world. We’re not.

I’m Eve Troeh for Marketplace.

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