Nancy Pelosi and the rest of the Democrats have been telling us for weeks now that they don’t want to increase drilling because it won’t help reduce oil prices even if they did. Amongst their favorite talking points is a US EIA report that stated that drilling in ANWR and generating 1,000,000 barrels of oil each day, would only reduce the price of a barrel of oil by $1.44.
At heart, I’m a very simple person. While I will dig into the complex if necessary, I prefer to use the simpler answers to a problem. I’ve had enough On the Job Training (OJT) for various life issues, that I think I can safely say that the answers to many issues lie right in front of my face if only I stop to look. I think the same holds for oil pricing.
I won’t go into debunking how the Dems have used the EIA report, plenty of other folks have done so expertly so there’s no need to retread that ground. Besides that, rebutting the EIA report requires a complex answer. No, I found an explanation of oil pricing that is much simpler.
This morning, oil prices were headed north again anticipating that US inventories were going to increase about 1.7 million barrels. Prices had moved from just under $115/barrel to over $116/barrel in anticipation of this report. As has been happening a lot lately, the “Experts” were wrong in their estimates and inventories increased by 9.4 million barrels, a 7.7 million barrel difference. Following the report, oil not only dropped below it’s opening price, it zipped right past it dropping $3 from its high.
The US uses about 20 million barrels of oil each day according to the EIA. The “excess” inventory of 7.7 million barrels announced this morning, amounts to about 1/3 of a days need or .1% of the annual needs of the US. If an increase in inventory of .1% of the annual US usage causes oil prices to drop by over $3 per barrel, does it make sense to you that producing the equivalent of 5% of the US needs (50 times more than the “excess” inventory)….OVER A LONG TIME, would only decrease the per barrel price by $1.44?
Nope, it doesn’t to me either.
