Senate Democrats

DPCC Memo: Myths vs. Facts On Gas Prices

Despite Republican attempts to change the facts, the truth is that domestic oil production has increased under the Obama Administration. Facts that Republicans are conveniently ignoring? (1) The Republican spending proposal takes a third of the cops policing the oil markets off the beat, making it more likely that speculators will drive up prices; and (2) the Republican spending proposal guts investments in alternative energy sources that will reduce our reliance on oil from dangerous and unstable regions of the world.

Myth: Domestic oil production is down in the United States under President Obama.

Fact: U.S. oil production, including that on federal lands and waters,  has been increasing since 2008, with its largest single-year increase in decades in 2009.  U.S. oil production is forecast to continue to increase through 2035.  And the U.S. oil industry has access to more than 60 million acres of federal land and water that they have not taken action to put into production.  [Bureau of Land Management and Energy Information Administration (EIA)]

Myth: Last fall’s moratorium on drilling new deepwater wells in the Gulf  reduced U.S. oil supply and is driving up gas prices.

Fact: Oil production in the U.S. Gulf of Mexico continued unabated throughout the Deepwater Horizon disaster, even while oil was spilling into the Gulf.   The moratorium – which was lifted in October 2010 — affected only the initiation of new deepwater drilling activity and had no application to existing producing wells.  Despite the Deepwater Horizon disaster, oil production in the Gulf of Mexico increased in 2009 and 2010 after falling since 2004.  Meanwhile, gas prices have increased over the last month, at the same time as domestic oil production has increased.  [EIA]

Myth: We can reduce oil prices if we just “drill baby drill” domestically.

Fact: More drilling is not a solution to high oil prices.  While U.S. oil production has dramatically increased in the last two years, oil prices have increased  as well.  In its 2007 Annual Energy Outlook, the Energy Information Administration analyzed the impacts of lifting drilling moratoria on the Atlantic, Pacific, and eastern Gulf coasts and found that: “The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”  [EIA]

Myth: The Republican “all of the above” energy strategy will reduce consumption and make us less dependent on foreign oil.

Fact: A true “all of the above” strategy would require focus on transportation efficiency and alternatives, which have proven track records of reducing our oil consumption.  Increased domestic drilling will not end the addiction to oil which compromises our economic and national security.  With less than 1.5% of the world’s oil reserves, the only way to reduce long term dependence on oil is by investing in a clean energy economy.   The Energy Independence and Security Act of 2007, which improved vehicle efficiency and increased our use of biofuels, will save more oil between now and 2030 than the U.S. currently has in oil reserves.  The Republican spending bill cuts funding for Energy Efficiency and Renewable Energy by more than $700 million.  It also slashes the Department of Energy’s loan guarantee program for clean energy developers and manufacturing companies designed to bring clean energy technologies to commercial scale use.  [NYTimes 02/14/11, Forbes 03/03/11]

Myth: The EPA’s regulation of oil refineries and the President’s Cap & Trade policy is to blame for higher gas prices.

Fact: 18 percent of U.S. oil refinery capacity currently sits idle, the highest idle capacity rate in over a decade; clearly, we do not have a problem with lack of refinery capacity.   EPA’s current Clean Air Act standards for vehicles are projected to save consumers money at the pump — $130 – $160 per year – and save 1.8 billion barrels of oil.  And, of course, the cap and trade proposal never became law.  To blame that policy proposal for gasoline price increases is yet another example of a cynical attempt to gain political points rather than address our fundamental addiction to oil.  [EIA and EPA]