In her latest Facebook post, Fox News contributor Sarah Palin claims that President Obama's “anti-drilling mentality” and “war on domestic oil and gas exploration and production” are to blame for the recent rise in gasoline prices. Media outlets that find Palin's Facebook postings newsworthy should note that this allegation has zero basis in economic fact.
I recently asked several economists and energy experts if there was any truth to the claim that the Obama administration's drilling policies are responsible for the recent surge in gas prices. Not a single expert I consulted said that the claim is valid, including those aligned with the oil industry. Here's a sample of the responses I received:
- “Absolutely No Merit To This Viewpoint Whatsoever.” Chris Lafakis, economist at Moody's Analytics and expert in energy markets, said: “I received your question about whether or not federal drilling policies are responsible for the current rise in gas prices. There is absolutely no merit to this viewpoint whatsoever. Near-term fluctuations in gasoline prices are determined by two primary factors: crude oil prices and seasonality. Since the deepwater drilling delay applies only to exploration and production, it would take years, maybe a decade to get any amount of crude oil out of the ground and into our gas tanks. In the meantime, global crude oil supply is exactly the same as it would have been if the government were giving away permits like candy.”
- “It's Not Credible To Blame The Obama Administration's Drilling Policies For Today's High Prices.” Michael Canes, research fellow at the Logistics Management Institute and former chief economist of the American Petroleum Institute disagrees with Obama's drilling policies. Still, he said: “It's not credible to blame the Obama Administration's drilling policies for today's high prices because of the relative scales involved.” He further stated that “world oil prices are determined in a market of around 85 million barrels per day of production and consumption, while the consequences of domestic drilling, particularly in the Gulf, likely would be more in the range of several hundred thousand to one million barrels per day, and most of that production would not occur for a number of years.”
- “Gasoline Prices At The Pump Would Be Higher Either Way.” Lou Crandall, chief economist of Wrightson ICAP LLC said: “Higher oil prices today are a global phenomenon, and the additional supply from increased drilling by the U.S. would not alter the global balance of supply and demand greatly. Gasoline prices at the pump would be higher either way. The only difference is that a somewhat larger share of the revenue would accrue to domestic interests (governmental and private) rather than to foreign suppliers.”
Most Americans don't have the time to fact-check the talking points they're bombarded with so we look to the news media to get to the truth, rather than just repeat what politicians say. Let's hope they're up to the task. Early indications are not good.
You won't believe who stepped up to fact-check Palin's claim that Obama's policies are to blame for the spike in gas prices. Fox News' very partisan financial analyst Stuart Varney explained this morning that “we would still have $4 gas no matter what we do in the Gulf because higher gas prices are the result of an expanding global economy and turmoil in the Middle East.”