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Thursday, March 29, 2012 ■ Page 17 More U.S. drilling didn’t drop gas prices


By JACK GILLUM and SETH BORENSTEIN Associated Press


litical cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.


monthly,


prices and U.S. domestic oil production by The Associated Press shows no statis- tical correlation between how much oil comes out of U.S. wells and the price at the pump. If more domestic oil drilling worked as politicians say, you’d now be paying about $2 a gallon for gasoline. Instead, you’re paying the highest prices ever for March. 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 fi gures. And that’s especially true about oil drill- ing in the U.S. More oil production in the United States does not mean consistently lower prices at the pump. Sometimes prices increase as Ameri-


can 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


A statistical analysis of 36 years of infl ation-adjusted gasoline


WASHINGTON (AP) — It’s the po-


title of GOP presidential candidate Newt Gingrich’s 2008 book “Drill Here, Drill Now, Pay Less,” as well as the campaign- trail claims from the GOP presidential candidates.


ner Mitt Romney said of his solution to higher gas prices: “I can cut through the baloney ... and just tell him, ‘Mr. Presi- dent, open up drilling in the Gulf, open up drilling in ANWR (the Arctic Nation- al Wildlife Refuge). Open up drilling in continental shelf, drill in North Dakota, drill in Oklahoma and Texas.’“ The late 1980s and 1990s show exactly


how domestic drilling is not related to gas prices.


tion dropped steadily from February 1986 until three years ago. But starting in March 1986, infl ation-adjusted gas pric- es 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 cor- rect, prices should have soared. Instead they went down by nearly a dollar. The AP analysis used Energy Depart-


Seasonally adjusted U.S. oil produc- Earlier this month, GOP front-run-


energy economics at MIT. American oil production is about 11 percent of the world’s output, so even if the U.S. were to increase its oil production by 50 per- cent — that is more than drilling in the Arctic, increased public-lands and off- shore drilling, and the Canadian pipeline would provide — it would at most cut gas prices by 10 percent. “There are not many markets where


the United States can’t impose its will on market outcomes,” Knittel said. “This is one we can’t, and it’s hard for the average American to understand that and it’s easy for politicians to feed off that.” Politicians — especially those in the


in the Middle East can tighten global oil supply. Growing nations like China or India adding cars to the road increases demand. But one thing we should con- trol is fraud and manipulation that can cause prices to spike even further.” The political party of the president


level it was in March 2003, when gas cost $2.10 per gallon when adjusted for infl a- tion. But that’s not what prices are now. That’s because oil is a global commod-


ity and U.S. production has only a tiny infl uence on supply. Factors far beyond the control of a nation or a president dic- tate the price of gasoline. When you put the infl ation-adjusted


drilling for more oil meant lower prices, the lines on the chart would consistently go in opposite directions. A basic statisti- cal measure of correlation found no link between the two, and outside statistical experts confi rmed those calculations. “Drill, baby, drill has nothing to do


with it,” said Judith Dwarkin, chief en- ergy economist at ITG investment re- search. Two other energy economists said the same thing and experts in the fi eld have been making that observation for decades.


The statistics directly contradict the If


ment fi gures for regular unleaded gas prices adjusted for infl ation to 2012 dol- lars, oil production and oil demand. The fi gures go back to January 1976, the earli- est the Energy Department keeps fi gures on unleaded gas prices. Phil Hanser, an economist and statistician at the energy consulting fi rm The Brattle Group; Uni- versity of South Carolina statistics pro- fessor John Grego; New York University statistics professor Edward Melnick and David Peterson, a retired Duke Universi- ty statistics professor, looked at the analy- sis, ran their own calculations, including several complicated formulas, and came to the same conclusion. When U.S. production goes up, the


price of gas on the same chart as U.S. oil production since 1976, the numbers sometimes go in the same direction, sometimes in opposite directions.


party that’s not occupying the White House — have long harped on high gas prices when expedient. Then-Sen. Barack Obama said in 2008, when he was run- ning for president, that “here in Ohio, you’re paying nearly $3.70 a gallon for gas, 2-1/2 times what it cost when George Bush took offi ce.” But Obama, who has seen gas prices go up 73 percent since he took offi ce, was singing a different tune last week in his weekly radio address: “The truth is: The price of gas depends on a lot of factors that are often beyond our control. Unrest


doesn’t seem to matter to the price at the pump either. Since 1976, the average monthly gas price, adjusted for infl ation, during Democratic presidencies has been $2.25; under Republicans it’s been $2.34. Obama had the steepest monthly average at $3.05 and Bill Clinton the cheapest at $1.68. When Bush and running mate Dick


Cheney campaigned in 2000, they ar- gued that as oil executives they could get oil prices down, with Bush saying, “I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply.” Yet it was during the last few months


of Bush’s term in 2008 that gas prices hit their highest: $4.27 when adjusted for in- fl ation. Associated Press writers Dina Cappi-


ello and Matthew Daly in Washington and Jonathan Fahey in New York contributed to this report.


price of gas “is certainly not going down,” Melnick said. “The data does not suggest that whatsoever.” The calculations “help make the point


that U.S. production and demand have little to do with the price of gasoline in the U.S., and lend support to the no- tion that there is not a great deal we in the U.S., acting alone, can do to affect the price of gasoline,” Peterson wrote in an email. He pointed out that Energy De- partment fi gures show that gas prices in the U.S. seem to rise and fall similarly to gas prices in Europe, showing that it has little to do with American drilling. And that’s the key. It’s a world market,


economists say. Unlike natural gas or electricity, the


United States alone does not have the power to change the supply-and-de- mand equation in the world oil market, said Christopher Knittel, a professor of


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