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Drill Here, Drill Now, Sell Abroad

December 3, 2011

During the 2008 presidential campaign, Sarah Palin popularized the “Drill Here, Drill Now” slogan, supporting expanded oil and gas exploration everywhere in the United States, regardless of environmental concerns, in order to reduce gas prices for American drivers. The “policy” didn’t take into account the fact that oil is a global commodity which meant that any oil extracted in the United States would be sold on a global market and only minimally affect the price at the pump for Americans.

Obviously, since the McCain-Palin ticket didn’t win, the “policy” hasn’t been implemented, though Obama did make an unfortunate gesture towards expanding drilling immediately prior to the Deepwater Horizon disaster. Nonetheless, the phenomenon ignored by Drill Here, Drill Now is playing out in the oil markets today: oil extracted in the United States is being exported to other countries because of the tepid appetite for gasoline among American consumers and the exports are keeping gasoline prices high here in the United States. Even if we were extracting more oil, the same thing would be happening. Oil is sold were it can garner the most profit, not where it’s extracted, and expanded oil drilling in the United States won’t bring down prices at the pumps. “Drill Here, Drill Now” sounds great, but it’s really just a charade.

3 Comments leave one →
  1. December 3, 2011 4:12 pm

    And as I understand it, the proposed “XL pipeline” from Canada to the U.S. is being touted by its proponents as offering a reliable supply of cheaper oil, from a friendly source, but in fact, most of that oil would go into the global market as well, with negligible affect on the prices in the US. For oil and other fossil fuels extracted in this country to stay here, I believe the industries would have to be “nationalized,” allowing the federal government to totally control shipments and sales, or federal laws would need to be enacted, enabling the fed. gov. to totally control the activities of privately owned energy companies.

    • Somerset permalink*
      December 3, 2011 4:18 pm

      I hadn’t though of that angle on the Keystone XL pipeline but that’s very interesting. My inclination is towards alternative fuels and fuel efficiency measures like increased MPG requirements or more robust public transportation options as opposed to federal action to make sure the oil is sold to domestic consumers but, either way, the public shouldn’t fall for the Drill Here, Drill Now ruse.

  2. JMenk permalink
    December 6, 2011 8:49 am

    Not trying to be argumentative, but I had a slightly different take. Although I am pro-environment, drilling in the US increases the global crude oil supply. US exports of refined oil products, such as gasoline, are a result of gasoline prices in the global market (as the article states), which are being driven up by supply / demand dynamics of crude oil. With OPEC’s tight control over supply, price for crude and, thus, refined oil products will be driven primarily by end-market demand. The only way to influence the global supply / demand dynamic is by reducing OPEC’s share and ability to manipulate oil prices. Drill Here, Drill Now may result in more refined oil product exports – which I, and the article, would argue is not a bad thing given the impact on domestic jobs, the trade deficit and overall domestic economic growth – and there may not be a perfectly direct correlation to prices at the gas pump for US consumers, but it does in reality reduce the cost of gasoline to US consumers via global markets (assuming OPEC does not explicitly factor US oil production in to their target production output), albeit in a manner much more diluted than the Drill Here, Drill Now folks would have us believe. To me, the biggest question is whether or not the costs of the environmental impact of drilling and extracting oil domestically are being fully borne by oil companies. That is a separate debate and one that I don’t think anyone can precisely answer quantitatively. Besides, high gas prices only increase the incentive for US consumers to undertake the initial mental / economic investment to switch to alternative solutions, such as hybrid cars, which has lasting positive long-term and stickiness once the initial transition has been made. Just pointing out the silver lining, from an environmental standpoint, to getting killed at the gas pump…

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