On the drive-time yesterday they were talking about how gas consumption in America is dropping due to several factors (granted the recession accounts for some of this) including improved mileage of new vehicles being sold, less miles being driven in personal automobiles (more use of mass transit), more alternative fueled/high MPG vehicles being sold, etc. Also, oil imports have been trending down while domestic oil production has been trending up and yet the price of gas at the pump has stayed at near historical highs (still close to $4 gallon here in SoCal). The explanation was that despite all the rhetoric with respect to opening up more land for domestic oil production, for the last several years there is no evidence that the amount of oil we produce here at home has any effect on the retail price of gas. The laws of supply & demand just doesn't work, at least not on a local level when you're dealing with a commodity which is traded on worldwide markets and where the price, to a great extent, is being controlled by Wall Street speculators and hedgefund managers.
And to even undermine the 'drill baby drill' mentality, many people are not aware that in addition to America being an importer of oil, we are also an EXPORTER of crude oil. In fact, it been reported that as incremental increases in domestic drilling and production has gone up, in almost lockstep with that has been the increase in the exports of oil that flows out of America. In fact, it was reported that much of the current exploration and drilling operations were justified, from a business point of view, as being able produce a good rate of return based on being able to EXPORT any incremental production as this would maximize the profit for the companies who are investing in these new production fields.
This of course completely blows-up the idea that all we need to do is issue more leases and drilling permits for here at home and the pump price of gas will start to drop back to what they were before Obama came into office.
You have to wonder about the intelligence of people who demand that corporations be given the freedom to do what they want and to let the market set the prices and then goes ballistic when this is exactly what happens, the oil companies sell their oil to the highest bidder, then turns around and sets the price gas at the pump based on the price they just got for sell a shipload of crude oil to China or Japan.
OCU
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