Drilling here, drilling now has no impact at gas pump
Remember when “Drill here, drill now” was supposed to solve our energy problems?
Well, we are drilling here. We are drilling now.
As the Wall Street Journal reports, crude oil production in the United States is expected to jump 12 percent in 2012 and another 8 percent next year. Domestic crude-oil production through the first seven months of 2012 — July is the most recent month for which numbers are available — is 21 percent higher than it was in the same period in 2008.
That influx of oil onto the American market has driven the price of West Texas crude, the benchmark for U.S. oil, down by 7 percent. But as the WSJ also notes (subs. req.):
… gasoline prices currently average nearly $4 per gallon nationwide. Rising U.S. crude production may seem like an attractive antidote, but it is proving ineffective on its own at a time when the world’s appetite for energy remains voracious and Middle East tension is a reminder that supplies could be disrupted.
“Even the significant increase in U.S. production is a small part of the world oil market,” said Severin Borenstein, co-director of the Energy Institute at the Haas School of Business.
Refiners that process the cheaper crude are selling gasoline and diesel into a global market driven more by higher international prices for crude, which are up around 7% in 2012.
Some are benefiting. Refiners in the Midwest—near where much of the new oil is produced or stored—can often pay less for the raw crude than do rivals in U.S. coastal areas and abroad, but can charge market prices for the sought-after gasoline and diesel they churn out.
HollyFrontier Corp., which owns refineries in Oklahoma, Kansas and elsewhere, saw net income jump 149% to $502 million year over year in the second quarter. Tesoro Corp., which operates a refinery in North Dakota, where crude production has roughly quadrupled in four years, reported a 77% leap to $393 million in the same period.
In other words, significant, sustained increases in domestic oil production have had and will have little or no effect on the price of gasoline at the pump, because gasoline at the pump is sold at the world price for that commodity. In fact, the financial benefit from increased domestic drilling is being enjoyed almost exclusively by refiners in the form of considerably enhanced profit margins.
Because that’s how the oil markets work.
– Jay Bookman
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441 comments Add your comment
stands for decibels
October 15th, 2012
2:40 pm
…by the way, I didn’t know about “that for more than two years of a term” provision in the 22nd amendment; I guess, somehow, I assumed until this time that a President Gerald Ford remaining in office until January 1985 would’ve been a (remote) possibility.
I also didn’t know that Grover Cleveland was born in a house on what is now a very busy street corner in NJ–”across from a Dunkin’ Donuts”, says the Parks and Forests page–that I’ve passed many times.
Morality?
October 15th, 2012
2:45 pm
I am still For TERM LIMITS for Congress – Repub, Dems and the one confirmed Socialist alike. Congress is broken there is no willingness to work together any more ……. TERM LIMITS will solve the problem.
Dr. Pangloss
October 15th, 2012
2:46 pm
Long ago, Pat Paulsen explained how supply and demand work.
When demand is high, prices go up. On the other hand, when demand is low, prices go up.
Morality?
October 15th, 2012
2:50 pm
Time to go vote for the President of the U.S. . early voting this time. The last 4 years have led to run away wasteful spending and a $6,000,000,000 addition to the Fed debt. When is Obama going to “evolve” in to a fiscal conservative? Never , so I have to vote for the lesser big spender of the two – that being Romney.
Paul
October 15th, 2012
2:50 pm
Morality? 2:45
I once posted the same thing. Jay referred me to the California Legislature – where term limits were imposed. The results did not follow – spending continued, deficits continued, partisanship continued. In short, the expected results did not follow, so something else might be at work.
Doggone/GA
October 15th, 2012
2:50 pm
“Congress is broken there is no willingness to work together any more ……. TERM LIMITS will solve the problem”
No, it won’t. If the voters still elect extremely partisan legislators…nothing will change.
Morality?
October 15th, 2012
2:53 pm
Economics 101 : when demand goes down – prices go down………. unless you are the Fed Gub’ment being paid off by special interests to avoid bidding on contracts ’cause you is union.
Smirkin' Joe
October 15th, 2012
2:53 pm
“As a liberal myself, I am proud that the news media often leans left.”
- Scott Stenholm
Exactly. I mean who wants anyone to strive for objectivity and to tell it the way it really is?
Morality?
October 15th, 2012
2:56 pm
Something will change…….. the long time fat cats being paid off by lobbyists for their vote will no longer be in power. TERM LIMITS.
Joe Hussein Mama
October 15th, 2012
2:58 pm
“Morality” — “I am still For TERM LIMITS for Congress”
I accept your concession and apology.
curious
October 15th, 2012
2:58 pm
In the overall scheme of things, if we had begun agressively working on new technology for energy solutions, we would be much further along. The price of energy went down along with the sense of urgency.
Without Government assistance new technology will be slow if ever coming.
Everytime the Government invests in anything, it can be considered payments to special interests and that includes energy companies, defense contractors, charter school, etc.
Boris Badnoff
October 15th, 2012
3:00 pm
Indeed. All Our Beloved Messiah has to do is raise his arms toward Mecca and crab grass is turned into high test gasoline and transported to our tanks so we can drive to rallies for Our Beloved Messiah. Did you think a Living God capable of lower the seas and healing the planet is going to be thwarted by a shortage of dead dinosaurs? All those refinery and oil field workers can be employed in carving Our Beloved Messiah’s features on Mount Rushmore and Stone Mountain. The ears and the teleprompter should prove to be a challenge.
Doggone/GA
October 15th, 2012
3:01 pm
“Exactly. I mean who wants anyone to strive for objectivity and to tell it the way it really is?”
There’s a difference between the news media “leaning” left and whether or not the STORIES “lean” left as reported. It’s been asked here many times: how about some representative examples of NEWS stories that are slanted. Not opinion pieces, but many new stories. No one has yet been able to come up with enough examples to prove that the STORIES are slanted.
Morality?
October 15th, 2012
3:02 pm
This weekends prediction: Florida 17 & S.Carolina 14……… Spurrier announces his retirement to Sun City at the end of the season.. UGA 31 & Kentucky 10……. eliminating S.C. from a chance at the SEC East title. Spurrier sets a Guinness World record for whining and crying and checks in to Green Leaf for rehab.
Smirkin' Joe
October 15th, 2012
3:03 pm
Wow…I am sure glad the president has weighed in on this issue. I think this is likely to tip my vote:
http://theclicker.today.com/_news/2012/10/15/14450335-president-obama-thinks-nicki-minaj-mariah-carey-can-sort-out-idol-feud
Morality?
October 15th, 2012
3:04 pm
Mama – You are a true politician in the Sick Willie mold – accepting what wasn’t offered.
Brosephus™
October 15th, 2012
3:05 pm
Term limits for Congress = democracy for the lazy
Jay
October 15th, 2012
3:06 pm
Economic sheets
Smirkin' Joe
October 15th, 2012
3:08 pm
“There’s a difference between the news media “leaning” left and whether or not the STORIES “lean” left as reported. It’s been asked here many times: how about some representative examples of NEWS stories that are slanted. Not opinion pieces, but many new stories. No one has yet been able to come up with enough examples to prove that the STORIES are slanted.”
I am sorry. If you haven’t the smarts or acumen to discern STORIES that are slanted, you really don’t deserve a response other than this one. Why don’t you learn a little bit about how STORIES are 1) chosen 2) headlined and 3) worded when published (you know, by discovering how journalism works) and shed your ignorance?
Morality?
October 15th, 2012
3:09 pm
Mama – I neither ask for or accept your apology… and expect none. I am still for TERM LIMITS for Congress.. no exceptions
Morality?
October 15th, 2012
3:12 pm
Just think how much oil land in the middle east the U.S. could have bought for that $6,000,000,000 spent during the Obama regime. And where is that $6,000,000,000 now?
Back Seater
October 15th, 2012
3:12 pm
getalife
October 15th, 2012
1:46 pm
There is no single energy solution. Our President tossed the kitchen sink at it and uses all technologies.
That is an outright lie, have you seen him toss a baseball, like a girl and left handed, what a dud
Joe Hussein Mama
October 15th, 2012
3:13 pm
“Morality” — “Mama – You are a true politician in the Sick Willie mold – accepting what wasn’t offered.”
And you’re in no way whatsoever an exemplar of your name. If you were, then you’d admit your mistake, apologize for having done it and for being a Richard about it, and then you’d move on.
Joe Hussein Mama
October 15th, 2012
3:15 pm
“Morality” — “Mama – I neither ask for or accept your apology… and expect none.”
Good, because I’ve got nothing to apologize for.
You were wrong, you asked me how, I showed you and you STILL argued about it for 2+ hours.
“I am still for TERM LIMITS for Congress.. no exceptions”
Irrelevant to the fact that the President’s not limited to eight years of service, as you incorrectly claimed.
curious
October 15th, 2012
3:16 pm
Morality?
October 15th, 2012
3:12 pm
“Just think how much oil land in the middle east the U.S. could have bought for that $6,000,000,000 spent during the Obama regime. And where is that $6,000,000,000 now?”
Think about Libya’s nationalizing private companies. What would prevent the Middle Eastern country from taking our money then expelling us?
Morality?
October 15th, 2012
3:16 pm
The Gub’ment could have monopolized the oil market with $6,000,000,000 and shut down the threat from the Mid East that now controls oil prices. Yes but Obama needed that money to create temporary, makeshift gub’ment jobs.
Morality?
October 15th, 2012
3:19 pm
Curious – I am joking. You can’t buy out a bunch of fanatics in their country. How about buying up all their homes and telling them to leave?
curious
October 15th, 2012
3:19 pm
Morality?
October 15th, 2012
3:16 pm
“The Gub’ment could have monopolized the oil market with $6,000,000,000 and shut down the threat from the Mid East that now controls oil prices.”
What happened to free enterprise? Who are we going to give the money to?
Jay
October 15th, 2012
3:19 pm
With $6 billion, you could corner the oil market?
Morality?
October 15th, 2012
3:31 pm
Mama – Never thought you owed me an apology and I didn’t ask for or expect one. Likewise I don’t owe you an apology either as I was not wrong. You have tried all this before over the subject of public school labor unions in Georgia when you said they did not exist. I showed you exactly where the evidence was they that do exist and then you tried to say that is illegal in Georgia. Wrong. They can be members of the NTF. They just don’t have any power in Georgia. Though I showed you proof there you would never acknowledge that you were wrong and now you are trying it again. You change and twist the argument to something I was not even talking about. I was not talking about the Constitution amendment to extend a term of the President when Congress has deemed a national emergency –
WWII. I was not talking about the Georgia public teachers having an effective labor union in Georgia. Georgia public school teachers can legally members of the NTF and many are. So I got no apology from you either time and I don’t need one or ask for one. Good day!
Morality?
October 15th, 2012
3:36 pm
Jay – you got me there – $6,000,000,000,000 – is what has been added to the Fed debt under Obama – is that enough zeros to cover the oil market?
Joe Hussein Mama
October 15th, 2012
3:39 pm
“Morality” — “Mama – Never thought you owed me an apology and I didn’t ask for or expect one.”
Good. ;D
“Likewise I don’t owe you an apology either as I was not wrong.”
You clearly were. I showed you where and how. But it’s clearly too much to expect of you to live up to your name.
“You have tried all this before over the subject of public school labor unions in Georgia when you said they did not exist.”
There are no Georgia teachers’ unions. You clamed there were, and I showed you that there weren’t.
“I showed you exactly where the evidence was they that do exist and then you tried to say that is illegal in Georgia. Wrong.”
Nope. I’m absolutely right. Teachers’ unions are illegal in GA.
“They can be members of the NTF. They just don’t have any power in Georgia.”
Which means that there aren’t any Georgia teachers’ unions. Thanks for the admission and concession!
“Though I showed you proof there you would never acknowledge that you were wrong”
Nope. I said that there are no Georgia teachers’ unions, and there aren’t.
“and now you are trying it again. You change and twist the argument to something I was not even talking about.”
Nope. You said this: “You uneducated illiterates need educating and Gub’ment 101 is now in session. The President has TERM LIMITS – meaning His/Her term is limited by LAW to 8 years maximum” and that’s clearly wrong. I’ve proven it so. (laughing)
“I was not talking about the Constitution amendment to extend a term of the President when Congress has deemed a national emergency – WWII.”
You were wrong about that, too. Congress didn’t take any such action with respect to FDR. You’re just plain wrong again.
“I was not talking about the Georgia public teachers having an effective labor union in Georgia.”
You said that there were Georgia teachers’ unions, and I pointed out that there’s no such thing.
“Georgia public school teachers can legally members of the NTF and many are.”
However, the NTF isn’t a Georgia teachers’ union.
“So I got no apology from you either time and I don’t need one or ask for one.”
Nor do you deserve one. (laughing, pointing)
“Good day!”
Now that you’re melting down, it certainly is! (giggling)
Morality?
October 15th, 2012
3:40 pm
I don’t blame Obama exclusively for the FED debt – he has had plenty of help. I do however give Obama a big assist in his prowess to spend out of control.
Jay
October 15th, 2012
3:42 pm
Jay – you got me there – $6,000,000,000,000 – is what has been added to the Fed debt under Obama – is that enough zeros to cover the oil market?
No. Not even close. Last year alone, Saudi Arabia earned $1 trillion selling oil. Besides, wouldn’t that be a rather large government intervention into the free market? Wouldn’t it be — SOCIALISM!?
Janney
October 15th, 2012
3:47 pm
Thulsa Doom
October 15th, 2012
11:21 am
They do loves they Koch card they do. I think it outplays the soros card by 47-1.
This reminds me of something I heard attributed to Bill Maher (not verbatim): The difference between rich Republicans and rich Democrats is that rich Dems actually vote against their own interest; they put the interest of the country first.
Tom Middleton
October 15th, 2012
4:20 pm
So if we can’t drill our way to energy independence due to free market principles, then we need to develop other sources of energy to help us get there, yes?
But isn’t this sort of like the “all of the above” energy approach President Obama has been advocating throughout his first term? No, it’s EXACTLY like he’s been advocating, and, obviously, the only one that will work!
So maybe it’s not a question of how will we get to energy independence that’s most important for us now, but WHEN will we get a Republican Party not in the pocket of Big Oil? Jay, I may not be a genius, but I’m pretty sure it’s not this election!
deegee
October 15th, 2012
6:52 pm
Yes, and the reason for more drilling here is because the price of oil has been high enough for long enough to make it profitable. That’s how the oil industry works.
edgewise
October 15th, 2012
8:52 pm
a driller is buying mineral rights in Wayne county in se Georgia. does it have anything to do with the possibility of exporting LNG from savannah?
Vast Right Wing Conspiracy (aka "Knuckle-Dragger")
October 15th, 2012
8:53 pm
Jay, I am glad you do not know anything about economics and markets; otherwise; this post might make me nervous. If emperor nero had turned loose ANWR, the gulf, the coast of California, etc., etc., etc., added in Keystone, and so on, and so on, and so on, we would have $1.50 gas by now. You crazy Democrats keep making the insane argument that nothing done today would have any effect on the price of gas tomorrow. Boy, y’all are real smart. It takes some time to get things going. Try to envision a planning horizon longer than a week away.
edgewise
October 15th, 2012
9:27 pm
natural gas over supply will be converted to LNG and exported. the energy
we have so abundantly stored underground by nature should be considered strategic to the future wellbeing and yes, safety of the country. energy sources should not be sold to the highest bidder. someday, someone could literally buy us out. someday there will be one owner of the worlds energy. they will protect it. if you want some, it will cost you.
Junior Samples
October 16th, 2012
11:30 am
…yet another point of pride for this newpaper on defending yet another failed obama policy.