Thursday, March 15, 2012

Oily Economics

Dear President Obama,

Your recent remarks regarding high oil and gas prices have left me confused.

In a speech delivered at a Virginia jet engine company on March 9, 2012, you proclaimed that the United States couldn’t “drill its way to lower gas prices.”   And by drilling, you most certainly meant activities affecting the supply of oil and its main derivative – gasoline. 

To summarize your assertion: increasing the supply of oil by more drilling won’t lower gas prices.

However, today you seem to take a different stance.  In response to even higher gasoline prices, you have conferred with UK Prime Minister David Cameron and others on releasing oil from the Strategic Petroleum Reserve. 

To summarize your (new) assertion: increasing the supply of oil by releasing oil from the SPR will lower gas prices.

I’m sure you can understand my confusion. 

So, Mr. President, which is it?  Will increasing the supply of oil lower or not lower gasoline prices?

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