Just a couple of weeks ago, ASP released a perspectives paper “Cause & Effect: U.S. Gasoline  Prices” that identified that the reason for high gasoline prices as changes in global crude oil markets.

Since then, we have seen a slight leveling off of crude (and consequently gasoline) prices that may lead to some consumer relief over the summer. However, the uncertainties of the global market – and especially prospects of new wars in oil producing regions like Sudan or the Middle East – mean that American drivers remain at the mercy of global oil prices.

However, what is somewhat ironic about this is that these high gasoline prices are coming at a time of record crude oil production here in the U.S. A boom in domestic oil production over the past 4 years has seen new fields in North Dakota, Texas and elsewhere turn the domestic oil production curve back upwards.

Now, I see news that this boom in production means that there is literally nowhere to put all of the crude oil that America is producing right now! Just last week, the Alaskan Explorer, an oil tanker working the route bringing oil from Alaska to the West Coast was forced to return to port in Valdez with 25% of its hold still full of oil (see this Alaska Dispatch article for more detail). It had to return because there was nowhere to put the oil. America literally has more crude oil than we know what to do with.

The prevailing argument – “Drill, Baby, Drill” or “Drill Here, Drill Now, Pay Less” is that if only we produced more oil here at home, consumers would quickly pay less at the gas pump. This argument has especially been made during the Obama Presidency.

Now, we see that the record increases in production, which really started after the ’08 financial crisis, have also corresponded with record increases in gasoline prices. We can see from the graph that there is virtually no correlation between domestic drilling and the average national price of gasoline. If the arguments had been true, record increases in oil production would have led to decreases in gas prices – clearly not the case.

The truth is, and remains, that changes to both American supply and American demand for oil can never be enough to change global markets. The only way to reduce America’s exposure to high gasoline prices is to use less of it.

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