Fox News is seizing on high gas prices in California to push for opening up new areas, including the California coast, to drilling, ignoring the real factors driving up prices at the pump. But experts say increasing U.S. production will have no impact on gas prices, and that the only way to protect against price spikes is to reduce consumption.
Gas prices in California hit near-record highs this week as a result of supply disruptions at several key refineries in the state as well as the shutdown of a contaminated pipeline. Fox & Friends devoted an entire segment to the California price spike this morning without once mentioning these factors. Instead, Fox's Charles Gasparino blamed President Obama for implementing "policies that discourage drilling." While Gasparino acknowledged that "some of this is out of [Obama's] control," he said the President should know that "we could have lower gas prices, lower oil prices if you start drilling."
Later on Varney & Co., Fox Business' Charles Payne blamed California policies, saying: "They won't take advantage of natural resources, they won't allow drilling, it's just economic suicide."
Local media are misrepresenting the solutions to the price spike as well. An OC Register editorial claimed that drilling off the coast of California would drive down prices:
Gasoline prices in reached a record high in California this week, making us wonder if it might be time to revisit energy policies in the state. Determining what causes the rise and fall of gas prices isn't easy - there are whole industries devoted to it. However, there are a few things that certainly don't help and ought to be corrected.
Let's begin with supply. California artificially constricts fuel supplies by banning oil drilling along the coast. The Federal Energy Information Administration estimated in June 2011 that there were some 15.4 billion barrels in the Monterey Formation off the coast of California. "If the EIA estimate is reasonably close to the mark, the Monterey Formation would be in a class with oil fields in Saudi Arabia," wrote Tom Gray for City Journal. To put that in perspective, that's roughly quadruple the estimated reserves in North Dakota's Bakken shale formation. By Gray's count, those barrels would be worth about $1.5 trillion in today's prices, and prices are expected to rise.
But because the price of oil is dictated by the global market, expanding U.S. production would not protect against price spikes. A recent analysis by the Associated Press found "[n]o statistical correlation between how much oil comes out of U.S. wells and the price at the pump."
The Energy Information Administration estimated that the difference between a scenario in which the Pacific Coast, parts of the Atlantic coast, and the Gulf of Mexico are open to offshore drilling and a scenario in which they remain off-limits is 3 cents per gallon of gasoline in 2030.
The long-term solution to gas price volatility is not increasing oil production, but reducing our demand. As economist Severin Borenstein put it, "To fix the problem, we just need to use less oil." Instead of promoting false solutions, the media should be talking about how California and the rest of the nation can make ourselves less vulnerable to these inevitable price spikes through investments in fuel efficiency, public transit and alternative vehicles.