The People of America's Oil and Natural Gas Indusry

Did Someone Mention Supply Matters?

Mark Green

Mark Green
Posted April 5, 2012

So, a couple of weeks ago the Associated Press reported on its own special investigation into whether increased domestic oil exploration and development – supply – has any effect on gasoline prices. AP’s conclusion: There’s no correlation and so more U.S. drilling won’t help.

Since gasoline pricing is more complex than that (see our new website), the more apt question is whether supply can affect the cost of crude oil, which accounts for 76 percent of the price we pay at the pump. It’s elementary: Increase supply and you can put downward pressure on the cost of crude, which is the fundamental driver of pump prices.

That’s what we’ve emphasized in posts on AP’s study here and here. Worth repeating is the review of AP’s report by the Marshall Institute’s William O’Keefe, who noted confusion in the wire service’s own story on its own findings:

“The AP even concedes this point mid-way through the story, noting ‘if drilling activity rises around the globe for a sustained period of time, gasoline prices can fall as that new supply eventually finds its way to market.’”

Supply matters – but don’t take our word for it, AP. Look at your own recent reporting:

“Oil Falls Below $107 After US Crude Supply Jump”March 28

And:

“Oil falls below $103 as US crude supplies jump”  – April 4

And:

“Oil drops below $102 on big U.S. supply increase”April 4

Supply matters.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.