We can't drill our way to cheaper gas

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February 22, 2012

Anonymous Daily Star The Daily Star Wed Feb 22, 2012, 02:45 PM EST

It's rather hard for us to understand as we pump the contents of our wallets into our vehicles' gas tanks, but there is actually good news when it comes to how much oil is being produced in this country.

Of course, when there is good news, there also tends to be bad news.

In Houston, where they know a thing or two about oil, the Chronicle newspaper has revealed some startling facts.

One is that in the last three years, the number of oil fields in the United States has quadrupled to 1,272.

The U.S. Energy Information Administration predicts U.S. crude oil production will increase to 6.4 million barrels a day in 2025, which is a million barrels more than in 2010. Some analysts are saying the EIA's estimate is far too conservative, and that production will increase much more.

That's the good news.

The bad news is that the United States consumes almost 20 million barrels a day, putting us at the mercy of the vagaries of the world market.

For example, every time Iran clears its throat, it seems, speculators are driving up the price of oil by anticipating crises that probably will never eventuate.

The domestic benchmark West Texas Intermediate price has been rising, hitting $103.24 at the end of last week.

According to the Chronicle, the EIA predicts the average world oil price will keep rising, despite the increased U.S. production led by extraction of oil from shale, which, by the way, is more costly than drilling for natural gas.

Before the anti-fracking folks around here get too nervous, the oil industry targets aren't in upstate New York, at least not yet.

The Eagle Ford Shale in South Texas, the Permian Basin in West Texas, and the Bakken Shale in North Dakota are churning out about 40 percent of the nation's land-based oil production.

There is more drilling on tap in the Gulf of Mexico and Alaska, too.

"As far as drilling and production, it's going to be really good and robust," Michelle Michot Foss, chief energy economist for the University of Texas Bureau of Economic Geology, told the newspaper. "But consumers will be upset because gasoline prices will continue to be high."

Some things will remain true. New York's taxes will make gas more expensive here than in most other states.

The price of gas will always go up faster than it comes down. Speculators in oil futures will make a lot of money.

Oil companies will make obscene profits yet still receive federal subsidies courtesy of their bought-and-paid-for members of Congress.

And no matter how much they drill, our pain at the pump won't go away.