Contributors

Wednesday, March 21, 2012

Still More Facts

In many ways, I'm very happy the energy issue is out front and center right now in public debate because we are starting to see more articles like this.

More US drilling didn't drop gas price

A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump. Political rhetoric about the blame over gas prices and the power to change them — whether Republican claims now or Democrats' charges four years ago — is not supported by cold, hard figures.

Oh really? 36 years you say?

Seasonally adjusted U.S. oil production dropped steadily from February 1986 until three years ago. But starting in March 1986, inflation-adjusted gas prices fell below the $2-a-gallon mark and stayed there for most of the rest of the 1980s and 1990s. Production between 1986 and 1999 dropped by nearly one-third. If the drill-now theory were correct, prices should have soared. Instead they went down by nearly a dollar.

Uh...oops.

Further...

Sometimes prices increase as American drilling ramps up. That's what has happened in the past three years. Since February 2009, U.S. oil production has increased 15 percent when seasonally adjusted. Prices in those three years went from $2.07 per gallon to $3.58. It was a case of drilling more and paying much more. U.S. oil production is back to the same level it was in March 2003, when gas cost $2.10 per gallon when adjusted for inflation. But that's not what prices are now.

.But what about Keystone?

Supporters of the controversial Keystone XL pipeline say it would bring 25 million barrels of oil to the United States a month. That's the same increase in U.S. production that occurred between February and November last year. Monthly gas prices went up a dime a gallon in that time. 

Facts, folks. These are facts. Read the entire piece as it contains many more hard statistics.

And what is it again that affects prices?

That's because oil is a global commodity and U.S. production has only a tiny influence on supply. Factors far beyond the control of a nation or a president dictate the price of gasoline.

Why is that so difficult for people to understand? Oh yes, that's right...Barack X and his army of killer robots that are destroying free enterprise in this country.

Of course, the ultimate irony here is that I'm beginning to think that supporters of increased domestic drilling are under the impression that the United States government would own the oil. They wouldn't, of course, because that would be socialism, right? So, the companies that would own the oil would be able to sell it on the free market.

Where do you think they would go and sell it?

13 comments:

GuardDuck said...

Just because you are economically illiterate does not mean that everyone else is.

inflation-adjusted gas prices

Oh really? Inflation-adjusted the old way that includes food and gas prices as part of inflation or the 'new improved' measure of inflation that doesn't take into account the most volatile parts of the average persons daily spending?


If the drill-now theory were correct, prices should have soared. Instead they went down by nearly a dollar.

Ignorance. The level of ignorance in such a statement is so perverse that words fail me. This also explains where some of your totally stupid comments come from.

It's been apparent for a long time that even discussing economics with you is futile - you just don't/won't grok basic concepts. This confirms it.

Mark Ward said...

Just because you are economically illiterate does not mean that everyone else is.

The level of ignorance in such a statement is so perverse that words fail me. This also explains where some of your totally stupid comments come from.

It's been apparent for a long time that even discussing economics with you is futile - you just don't/won't grok basic concepts.


How exactly? See, I think this (like many other of your statements) is bullshit. Rather than actually put in the work to explain how (or you possibly don't know), you bring the personal insults. It's a complete fucking sham, isn't it? Throw out some verbal abuse and hope the weak liberal withers. Yeah, that time is over, dude.

I've made a sound economic argument with evidence and facts. Your turn. You have plenty of evidence in this link. Refute it. If you need a good place to start, explain to me how private companies are NOT going to sell their oil to China and India and, instead, will keep all the oil here. Unless, of course, you are saying that the government should centrally plan the oil business and, perhaps, engage in mercantilism or protectionism.

But you can't possibly be saying that, right?

Dr. Froncknsteen said...

It certainly doesn't matter what anyone posts here. You already seem to magically know what people are really thinking without having to actually read and understand what they write. You certainly don't feel any need to answer questions relating to anything but immediate gas prices. You appear to be epistemically closed and posting only to demonstrate your superiority over those awful "others" (sadly, that demonstration is effective only in the minds of you and your 3-4 fellow travelers).

Stern Fan said...

I'm continually amazed by the complete lack of substantive responses to the facts and figures that Mark offers. Personal insults and saying he won't change his mind is a cop out that avoids having to deal with things you don't like. So deal with them and explain how we aren't a part of the world oil market. I'd also like to see an answer to whether or not we should engage in protectionism and inhibit free trade in terms of oil.

GuardDuck said...

I'm continually amazed by the complete lack of substantive responses to the facts and figures that Mark offers.

You wouldn't be if you'd have read him for any length of time. If you present him with a contradicting fact he changes the thrust of the argument, if you try to get him to follow a series of logical steps he claims you are trying to make him 'dance', he brings up irrelevant numbers and claims victory in the argument.

And personal attacks and insults? Please! Half of Marks posts are insulting attacks upon conservatives and libertarians - his false indignation aside.

GuardDuck said...

I've made a sound economic argument with evidence and facts.

No you haven't.

explain to me how private companies are NOT going to sell their oil to China and India

Straw-man argument alert.

Throw out some verbal abuse and hope the weak liberal withers. Yeah, that time is over, dude.

You want a debate? You promise you won't walk away when it goes against you? You promise you will answer direct questions when asked of you? You promise you won't change the subject before the debate on a prior subject is settled?

That's what you have to do before you can even be debated with - otherwise any converstation with you is handicapped by your prevaricating debating 'style'.

Mark Ward said...

Well, you hardly answered any of mine so I find your comment here to be highly hypocritical. Shocking, I know.

And walk away? Again with this drivel? I've done three posts on this subject since it came up in comments. Truly, sir, you have a bizarre perception of what "walking away" means.

I've addressed all of the points that 6Kings and you have made with facts and evidence that directly refutes them and shows them to be extremely one sided and originating from biased sources. You're going to have to do better than that if we are going to have a debate.

In other words, a critical analysis. Honestly, I don't think you are capable of it because somehow the facts that you don't like are "liberal."

GuardDuck said...

OK Mark, we'll see soon enough if you've changed your ways.

Question to start: what is George Washington's birthday?

Mark Ward said...

It depends on which calendar you use-Julian or Gregorian. If you use Julian, it's February 11, 1731. For Gregorian, which Britain and its colonies adopted in 1752, it's February 22, 1732. But your question raises in an interesting point.

If you present him with a contradicting fact he changes the thrust of the argument, if you try to get him to follow a series of logical steps he claims you are trying to make him 'dance', he brings up irrelevant numbers and claims victory in the argument.

By bringing up Washington's birthday, you have essentially fulfilled your "analysis" of me. So, let's try to stay on topic here. And remember this is a two way street. You have to answer my questions as well. More importantly, a critical analysis of the facts and evidence at hand should be offered as well.

I'd also appreciate it if you didn't use any of Boaz's 14 points in our discussion. Here they are to review.

http://www.straight.com/article-401945/vancouver/dr-cynthia-boaz-14-propaganda-techniques-fox-news-uses-brainwash-americans

So, let's start with your analysis on how it would all play out if the president opened all available areas to drill. Your contention is that gas prices would drop, correct? And that we would become less dependent on foreign oil, right? Explain how that would work given that the US government does not own the oil and that oil is world commodity. Simply saying "Supply would be increased" isn't an answer. World demand in emerging countries must also be considered.

6Kings said...

Hmmm, Seems Citi Investment Research and Analysis agrees with my points and counters yours, M.

"This energy boom would have a transformative effect on the domestic economy. Here are just a few of the most astonishing consequences in a "good-case" scenario:

* Citi analysts expect real GDP to increase by 2.0 to 3.3 percent—$370 to $624 billion—as a consequence of new production, a decline in energy consumption, and the economic activity generated along with this.

* 3.6 million new jobs could be created by 2020 as a consequence of increased energy production. Of those new jobs, some 600,000 would probably be devoted to oil and gas extraction while 1.1 million would be generated to meet demand in related industrial and manufacturing sectors. National unemployment could subsequently decline by up to 1.1 percent.

* What's more, risks to the U.S.—in particular, geopolitical risks—would dramatically decrease. A domestic or continental energy boom would diminish the importance of conflict within and tensions involving the Middle East, as the U.S. would become significantly more energy independent.

* Finally, Citi analysts note that this could lead to a considerable decline in oil prices."

What is that you say? Decline in oil prices because there is a significant new supply of oil?

All conjecture, of course, as we may never know with this foolish Administration and unknown future Administration.

Mark Ward said...

I'd go along with the projections on the first two and say that they would be very possible. Certainly, we would see some sort of increase in GDP and jobs would be created as a result of increased energy production.

The third point assumes some sort of government control on oil, right? Neither you nor Guard Duck have explained how the government is going to reduce their geopolitical risk with PRIVATE oil. It's their's to sell as they see fit on the free, world market. After all, they would just be leasing the federal land. Unless, of course, you are advocating some sort of protectionism or centrally planned oil economy. But that can't be, hmmm?

I also would say that the last point is very vague and general. Again, we have increased supply in the past and the price has gone up. We have decreased supply and it has gone down. The evidence is here in this post. What do you say to that?

There are many other factors that affect price, not just supply, right? What would some of those be?

The other thing to consider here with this link is that it comes from a speculator driven view. Isn't this, in fact, part of the problem with high gas prices? Reports like this?

And what about all those unused federal leases that are untapped? Are those part of the boom we will experience in the next 8 years?

Finally, it seems to me that this report says we are likely to experience an energy boom. How can this be if Obama and his liberal buddies are doing everything in their power to stop the energy industry?

6Kings said...

The third point assumes some sort of government control on oil, right?

Uh, this has already been explained and it has nothing to do with government. Not only that, this addresses your continued blathering about speculators. A significant supply coming from a stable area of the world not as affected by some dictator saying 'boo' means less speculation and fluctuation of price due to perceived risk. Doesn't absolve it but should reduce it.

Again, we have increased supply in the past and the price has gone up. We have decreased supply and it has gone down. The evidence is here in this post. What do you say to that?

There are other factors to consider like you said but the most basic is supply. I doubt the past production increases were significant enough to affect price versus what they are projected in the future in this case. Even with the projection, I doubt it will ever completely remove fluctuations due to conflict, natural disasters, or other risks. That is how the market works.

And what about all those unused federal leases that are untapped? Are those part of the boom we will experience in the next 8 years?

The concept of unused federal leases is a red herring because it is based on a specific government definition. See debunking of unused leases.

"Over on Exxon Mobil’s company blog, Ken Cohen notes that the DOI report defines “inactive leases” as areas that “may be subject to certain ancillary activities such as geophysical and geotechnical analysis, including seismic and other types of surveys.”

Did they just call a seismic survey – one of the most fundamental activities of finding oil and natural gas – ancillary? Meaning it’s not essential, secondary in nature, or extra activity?

Yes, they did. And that proves my point. You don’t have to be an industry expert to know that seismic surveys – along with a whole host of other activities – are among the most essential activities in oil and gas exploration, and anything but a sign of “inactivity.”"

Why 'ancillary' activities are important? "..onshore wells can cost tens of millions of dollars to drill and offshore wells hundreds of millions. And even after spending millions shooting and analyzing seismic data, there’s no guarantee a drilled well will be a successful one."

Finally, it seems to me that this report says we are likely to experience an energy boom. How can this be if Obama and his liberal buddies are doing everything in their power to stop the energy industry?

Just because you choose to ignore all of the evidence that they are limiting federal land use doesn't mean it isn't so. The numbers from the Dept of the Interior say so. Industry leaders say so. Obama Administration's actions say so (Mostly EPA). I would expect that this projection is based somewhat on the government opening up more land for exploration but the Citi analysts would have researched that as part of the projection and I didn't see that specifically.

Mark Ward said...

Doesn't absolve it but should reduce it.

I still think that you are failing to consider demand in the world market as well as the cartel behavior of OPEC in your calculations. Unforeseen world events could also upset price forecasts.

Regarding your link debunking unused federal leases, do you have an alternate source or two of information to back it up?

Just because you choose to ignore all of the evidence that they are limiting federal land use doesn't mean it isn't so.

This statement simply isn't true. The evidence that you provided isn't the entire story. You cherry picked information to support you argument. That's called confirmation bias. I offered information that countered your claims and you have chosen to ignore it. Neither you nor Guard Duck has countered any of the facts I have presented that shows production is up and imports are down.

I'm putting up a post today with this link.

http://www.nytimes.com/2012/03/23/business/energy-environment/inching-toward-energy-independence-in-america.html

Let's continue this discussion in that thread as I would be interested in your thoughts and hope that you would change your mind.