How Republican Oil Only Strategy Increases Gas Prices

Currently, a massive and ongoing political attack on Barack Obama continues unabated, blaming him for high gas prices. In short, not only is this blame misplaced and misinformed, the republican-proposed solutions to high gas prices are doomed to failure.

Oil Only Not Enough

Currently, republicans are only proposing to expand access and increase drilling as a solution to high gas prices. This proposal blatantly ignores the fact that since Bush ended his presidency oil and gas drilling has increased by 350%. Furthermore, oil and gas companies are failing to use drilling leases they currently have access to on public lands. The best areas have already been leased, so opening new areas would only increase oil supplies at the margins. The best-case scenario for new drilling would result in only marginal gains in supply. This marginal increase would do little if anything to reduce prices on a world market that is now demanding more than 90 million barrels per day at $106 dollars a barrel.

Chasing the Difficult, Depleting Oil Is Expensive

Currently, the cost to produce a marginal barrel of oil is as high as $70. What this means is that gasoline prices won’t drop below $2.90-3.20 per gallon unless demand for those marginal barrels is destroyed. And that means less oil demand. Instead of 90 million barrels per day of oil demand, we’d need about 88 million barrels per day. But there’s no way to do that without alternatives, reduced consumption or increased efficiency.

The reason this marginal oil is more expensive is due to the energy, expense and materials required to break it out of the ground. Marginal oil is locked in rocks that need to be fracked, baked, or crushed. It lies in pools more than two miles beneath the ocean floor, more than two miles beneath the surface of the water. Accessing this oil is a very difficult and costly endeavor. And the oil companies are now wed to this high price in order to keep accessing this oil.

Oil Market Dominance Allows for No Competition

The market dominance facilitated by oil companies results in political pressure that stifles alternative energy development. You can see this directly in republican attacks on all forms of US alternative energy spending, attacks on electric vehicles like the Chevy Volt, attacks on alternative fuels like ethanol and other biofuels, and attacks on energy efficiency. Meanwhile, republicans fight tooth and nail to protect oil company subsidies and prevent oil companies from paying any restitution that results from accidents, spills, and deaths due to oil industry operation. Republicans have long been apologists for the oil industry and this trend seems highly unlikely to change.

World Crude Oil Production Peaked in 2005

The underlying reason behind high oil prices, though, is the fact that world crude oil production peaked in 2005. From that point forward, new oil was forever after bound to be more dirty, dangerous and expensive. In fact, this oil will continue to grow more expensive as time goes forward no matter how much we drill and no matter how many new sources we exploit. The reason behind this increased cost and difficulty is due to the fact that the new fuels called ‘oil’ aren’t really oil at all, just increasingly diffuse and hard to use mineral resources that are mildly interchangeable with oil.

In the end, the combination of these factors means that unless viable alternatives like electric vehicles, more efficient vehicles, and biofuels continue to gain market share, there will be no hope for a long-term solution to high oil prices. For this reason, irresponsible republican policies relying only on oil are doomed to failure in much the same way their irresponsible policies of economic deregulation were doomed to failure. For the American public to continue believing the misinformation both they and the oil companies are spreading will result in America going down a very dark and difficult path. It is a path that is entirely avoidable should we make the right decisions now.

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