We all have heard the rhetoric about the price of gas….it is Obama’s fault…..we need to drill more…..American oil will bring the prices down…sorry, sports fans but NONE of that is true! At best it is just electioneering bumper stickers….but the American people are always falling for bullsh*t and why would this be any different, if anything it will get more traction because it effects most Americans daily…….
Let’s look at a few facts…….by 2006, the US was the 3rd leading oil producer in the world…..we are drilling so much that we have become an oil exporter for the first time since 1949 and oil production is up 10% since Obama is been the president….and NONE of that has brought the cost of gas down…..and now they want me to believe that more drilling will do that which it has not done in at least 5 years…..sorry asshats… I am NOT that gullible!
Gasomics 101: Drilling does not affect gas prices at the pump despite rhetoric
Gas prices are not a function of how much oil is drilled in the US versus how much is drilled in the world. Oil prices are set on a global level. Gas prices are the result of three factors: global price of a barrel of oil, state and federal taxes, and gas supplies coming out of refineries.
Impact of the price of crude oil
Since the US imports over 64% of its oil, the amount of oil produced domestically would have to double to the levels of 1970 which was1.2 million BPD to make any difference at all. It took nearly 40 years to decline to the levels under Bush. If it were even possible to produce that much oil in the US again, it would take years to ramp up production.
The cost of extracting a barrel of oil today according to the CEO of Exxon, the nation’s largest oil company, is about $60-$70 dollars a barrel or $0.65 cents a gallon. Oil is trading on the markets at over $100 a barrel—a 30% to 35% gross markup. Oil companies make a profit of 2-3 cents a gallon. Where does the rest go? A large portion goes to Wall Street oil speculators. Industry experts have estimated oil speculators increase the cost of gasoline by $0.75 a gallon.
Sometimes the price of crude oil increases due to production levels set by OPEC. Other times, it is affected by a disruption in oil supply. That was the case with the spikes in the 70’s. Neither of these are the case with this current increase. The Arab spring uprisings were the excuse for speculators driving up prices, but no disruption in oil production or shipping has actually occurred. This is an artificial increase in gas prices designed to put profits in speculator’s pockets.
Impact of gas taxes and taxes on oil companies
The federal excise tax on gasoline is 18.4 cents a gallon—the same as under George Bush. States add taxes ranging from a low of 8 cents a gallon in Alaska to 31.9 cents a gallon in New York. Gas taxes do not move with the price of oil or the price of gas.
Oil companies and their apologists blame taxes for high prices. Truth is, oil companies have so many write offs and subsidies, they actually pay almost no federal tax.
Impact of refineries
A very large portion of the cost difference between crude oil, and price of gas is the cost of refining it. Previous increases were the result of a reduction in refining capacity. Hurricane Katrina damaged oil refineries in the gulf reducing capacity. Fires at refineries also cut capacity. None of that is occurring now. Gas supplies are normal.Are the President’s policies to blame for current gas prices?The actual answer is that gasoline prices are not really affected by any policy of the Obama administration. Domestic production is increasing, not decreasing.After a short moratorium on drilling in the Gulf after the BP disaster, permits for new deep water oil wells are being issued. The recent Exxon discovery was from a well permitted after the BP moratorium was lifted. The President announced a week ago new policies to speed up domestic oil production even more.It is an election year, and Americans are hurting from high gas prices. It creates a convenient opportunity to blame the public’s misery on the President to win votes. The facts do not support this rhetoric, but in political speeches, facts seldom come into play. Production declined under every Republican President and Republican Congress since Nixon.
Speculation, my friends! There is your culprit, not anything any president has done or said. But by all means, vote for the biggest liar and your gas will be $2.50 a gallon as soon as he/she is elected……..and by the way, as long as you are buying bullsh*t…..I have a bridge in Brooklyn I would like to sell you……
You want to spend less on gas? Here is an idea……..STOP buying and driving gas guzzling monstrosities just to impress your neighbors….mindless consumerism is just as guilty of raising gas prices as anything…..