Why the Right's Zombie Lie About Gas Prices Is Wrong But They'll Never Let it Die
Continued from previous page
Domestic Supply Is Up While Demand Is Down
Time magazine's fact-check notes that “domestic oil production has steadily increased from about 5.18 million barrels a day in 2005 to more than 5.5 million barrels a day last year,” largely “thanks to a major increase in unconventional shale oil produced in Texas and North Dakota, which now produces more oil than the entire OPEC nation of Ecuador. There are more oil rigs now working in the U.S. than the rest of the world combined.” The New York Times notes that the production of “crude oil and other liquid fuels, onshore and offshore” is at its highest level since the 1980s.
Conservatives push back by claiming that production offshore and on federal lands has declined under Obama. But that's a lie based on a drop in production in 2011 and 2012. According to the Energy Information Agency, “production on federal lands and offshore during the first three years of the Obama administration was 13 percent higher than from 2006 to 2008.” Time also notes that Big Oil “is already sitting on 7,000 approved onshore drilling permits that have been unused, along with millions of acres under lease in the Gulf that haven't been explored yet.”
We are already importing less oil than we have in many years. According to the New York Times , “In 2005, oil imports accounted for nearly 60 percent of America’s daily consumption. In 2010, for the first time in recent memory, imports were less than half of consumption.”
That's in part because domestic demand has declined as a result of the recession. But it's not just the recession – the Times also reports that “Americans are getting more miles to the gallon, which means there’s that much less carbon dioxide going into the atmosphere.”
The recession has had a lot to do with the decline, but so has fuel efficiency. Ten years ago, cars and light trucks (including S.U.V.’s) averaged 24.7 miles a gallon. In 2011, the figure rose to 29.6 miles a gallon as consumers chose more efficient cars. Two landmark agreements between the administration and the automakers — aimed at improving efficiency and reducing greenhouse gases — could raise it to 55 miles per gallon by 2025.
In other words, the administration's policies are in fact lowering fuel costs over the long haul, even if most of those benefits are yet to be realized.
Growth, Instability and Speculation
Domestic supply is up and demand down, so why are prices so high?
First, as our own consumption has declined, demand from the big developing economies – notably India and China (and to a lesser degree, Brazil)-- has increased. The International Energy Agency projects that Chinese demand alone – which will increase by 70 percent over 2009 levels by 2015 – will acount for 42 percent of new global demand over that time-period.
At the same time, instability in the Middle East and Africa has impacted global supplies, and, more importantly, speculation about future instability is helping keep those prices high. According to CBS News' fact-check, “rising gas prices have less to do with what’s happening out in the world than it does what’s happening inside places like the New York Mercantile Exchange.”
Commodities traders are betting that gas prices will continue to rise. By using billions of their private equity funds and their clients’ money to buy gasoline futures, they’re pushing the price of oil even higher, which in turn makes your gallon of gasoline more expensive, even though nothing bad in the Middle East has actually happened. Critics say speculators are capitalizing on the very fear they’re helping to generate.