Statement of Tyson Slocum, Director, Public Citizen’s Energy Program
As the rising cost of gas becomes a prominent talking point in the 2012 presidential race, it is important to remember that it is impossible for the U.S. to produce our way to lower gas prices.
The days of cheap gasoline are over – and no amount of offshore drilling is going to change that.
Recently, demand for U.S. gasoline has plummeted. It’s down 5.4 percent – or nearly half a million barrels a day – from a year ago, marking the 24th week in a row that year-on-year demand is lower. At the same time, retail gasoline prices are up nearly 12 percent from a year ago – and continue to rise. Something isn’t right here.
Because oil companies and financial traders (think Goldman Sachs and Morgan Stanley) make money by speculating on oil trades, the cost of gas continues to rise along with their profits. This practice was addressed by the Dodd-Frank Wall Street Reform and Consumer Protection Act, but since some of those rules haven’t yet taken effect, it’s business as usual for Big Oil and Wall Street alike.
Motorists are doing their part; we all continue to use less gasoline and conserve. Yet how has Big Oil responded to Main Street’s conservation efforts? It has shuttered refineries and begun exporting record amounts of refined petroleum. For the first time in 62 years, America is now a net petroleum exporter. (We still import half of our crude oil needs, but anemic domestic demand combined with high domestic oil production has resulted in an oversupplied domestic market, providing incentive to refiners to export.) The result is a dysfunctional market that has Wall Street and Big Oil cashing in while conservation-minded Americans pay the price.
There are two solutions. Short-term, we need to crack down on the speculators. Long-term, we need to aggressively invest in giving American families access to alternatives to expensive gas by investing in the electrification of the transportation sector and increasing deployment of mass transit. Until then, it’s more pain at the pump while execs cash in.