Republicans have insisted, and will continue to insist through November 7 that drilling for more and more domestic oil will result in low gasoline prices in the United States. Okay, let's take a low-tech look at this premise.
At the present time, demand in the United States is weak - weak - at the same time gasoline prices are high, suggesting (in front porch economic terms) that the supply of oil in the United States is low, which on its face is confusing in the face of this:
"Gasoline demand continues to post steeper year-over-year declines as we near the end of February, in tandem with the steady rise in gasoline prices," said John Gamel, gasoline analyst with MasterCard.
Now, there are lots of excuses for this, including insufficient refining capacity. Who controls that and is it by design? Why go to all the time and expense of refining oil into gasoline when you can just sell the oil right out of the ground?
And that's exactly what's happening. The United States has a large surplus of crude oil, as the result of "drilling baby drilling." Now if that oil were all refined into gasoline and earmarked for the U.S. market, falling demand would cause gasoline prices to lower precipitously.
This is exactly what the Republicans are telling us would happen if we drilled even more. ??? We already have the oil required to lower prices, and they aren't lowering.
So what's the problem?
It's not a "problem," it's businesses being businesses and doing what businesses do. It's exactly what Republicans say out of the other side of their mouths that businesses SHOULD be doing.
Oil companies are not using that "drill baby drill" surplus to reduce U.S. gasoline prices. They are selling that excess oil to foreign countries (probably including some of those socialist states the teabaggers so despise) for whatever the market will bear, and what the market will bear is pretty clear at the gas pump.
I'm not saying oil companies should be losing money to reduce oil prices in the United States. That would be ridiculous in the real world. But that's exactly what the Republicans would have us believe would happen if we drilled more (ignoring the fact that we have already done it and it didn't happen).
As most people here realize, oil is sold in the global market, meaning any lower price resulting from the sale of oil from U.S. reserves, is diluted by the demand for oil of the entire world, so that in reality, no matter how much we drill, the resulting decrease in gasoline prices - if it exists at all - is a few pennies per gallon, not enough to buy a cup of coffee on sale in the convenience store next to the gas pump.
Now I realize that other factors, including speculation, are responsible for high gasoline prices, but I'm stripping this down to the basic argument made by the Republicans, who don't mention speculation or refining or anything else as the cause of high gas prices. According to them, gas prices are high for one reason and one reason only. Barack Obama won't drill for domestic oil. That, by the way, is bullshit as well, as more drilling is taking place now than under the Bush administration.
Would someone please reduce this to a bumper sticker?
CORRECTION:
Several commenters have pointed out correctly that we do not have a surplus of domestic crude oil, and that it is refined petroleum products (especially gasoline) that are being exported, not crude. I apologize for the error.
Unfortunately, my mistakes have drawn attention away from my point which is simply that increasing domestic crude supplies does not automatically result in lower domestic gasoline prices, as the Republicans have led people to believe.
When domestic gasoline demand goes down (as it presently is) oil companies do not sell more gasoline in the U.S. market to lower prices, they export it to get the highest prices they can.
This is not Machiavellian, it is marketing. What is Machiavellian is the Republican insistence that increasing domestic crude supplies will significantly lower gasoline prices. No, that increased domestic supply will be commingled with the imported foreign supply, refined and sold to the highest bidder, wherever in the world they may be.
That's all I was trying to say. I should have spent more time on this. Was in a hurry to get my butt operated on.