Originally posted by FMF
Do you think the U.S. can drill its way - domestically - to lower gas prices? Do you think that the drilling of oil within the U.S. can affect world prices significantly and over a long period?
With the disclaimer that I think it would be a bad idea for security, economic and environmental reasons (high gas prices are good in the long run IMO because they decrease long run demand as people choose more fuel efficient cars and shorter commutes), I think that we could.
The US consumes more oil than any other country and if we brought ourselves to the point of not having to import any OPEC petroleum, I would think that would have to affect the global market.
It is true, as PP pointed out in the other thread, that oil produced in the US would be placed on the world market and not necessarily all be used to displace imports.
Nevertheless, if the US could possibly acquire all necessary petroleum from non-OPEC sources, I could see the US government banning oil imports from countries that engage in anti-competitive behavior that would violate US antitrust laws (as OPEC clearly would). This would force most of the oil produced here to stay here.
Incidentally, there does seem to be a consensus that fracking and increased production has led to a fall in natural gas pricing. While it is true that the US controls more of the world share of natural gas than of oil, it certainly seems probable that increased US production could affect oil prices as well.
I want to stress though, as Moon pointed out on the other thread, this is NOT a short term fix. Short term oil prices swing wildly based on political developments, economic growth (or lack thereof) and speculation. Also, oil is a commodity with a low short term elasticity. If you own an SUV, you have to fill it up to get to work and shopping and the kids to school, regardless of what gas prices are. Sure, you can take a shorter vacation, but that's a small impact relative to the other factors that affect oil prices.
But, petroleum does have a large long term elasticity. There's a reason Hummer went out of business. In 2001 and thereabouts, when gas was $1.25 a gallon, the roads were filled with enormous SUVs driven by individuals to get to work and shopping. The waste was enormous. Today... not so much. The failure of the Volt notwithstanding, I think any American driver will notice the difference between the size of the cars on the road now and the size of the cars on the road 10 years ago.
It's the long term in which increased drilling would have its impact.