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‘Drill, Baby, Drill’ Plan Shows Results

‘Drill, Baby, Drill’ Plan Shows Results

Just a few years ago there was a debate over energy policy that included the phrase “drill, baby, drill.”  The belief was that if drilling for oil in the U.S. increases so would oil production and gasoline prices would decline.

President Obama, however, did not believe that more drilling and production of oil would have any impact on the price of gasoline. He said that proponents of “drill, baby, drill” could not achieve the goal of driving down gasoline prices to $2.

He said the “three-point plan for $2 gas: Step one is drill, step two is drill, and step three is keeping drilling” would not work.

He went on to say that “the American people aren’t stupid. They know that’s not a plan.”

Well, crude oil production has increased dramatically, and crude oil prices have declined to less than $2 per gallon before taxes.

Crude oil futures for September delivery on the NYMEX closed at $49.59 on Wednesday, and gasoline closed at $1.6448 per gallon.

Oil inventories in the US fell by 1.5 million barrels in the week to July 28th, according to the Energy Information Administration (EIA).

The report also showed estimated weekly gasoline demand at a record high 9.842 million barrels.

Distillate demand is 14.5 percent higher than during the same period last year.

Oil prices came under pressure last week on news top oil producing countries may be boosting output. OPEC oil output rose in July to a 2017 high, a recent survey found, led by a further recovery in supply from Libya, one of the countries exempt from a production-cutting deal. Iran’s oil exports also increased. Russia’s oil output stood at 10.95 million bpd in July, unchanged for a third month and in line with its pledge to curb production, government data showed on Wednesday.

EIA projects U.S. oil production will average almost 10 billion barrels a day in 2018, which would beat the previous record of 9.6 billion in 1970.

Whether or not you are an advocate of the “drill, baby, drill” plan, the fact remains that the increase in drilling and oil production has created an oversupply of petroleum, which has caused gasoline prices to drop below $2.

Alex Mills became President of the Texas Alliance of Energy Producers in 2000, following the merger of the North Texas Oil & Gas Association (NTOGA) and the West Central Texas Oil & Gas Association (WeCTOGA). The Alliance is the largest state oil and gas associations in the nation with more than 3,000 members in 305 cities and 28 states.
Mills moved to Wichita Falls in 1994 as Executive Vice President of NTOGA, after living 8 years in Washington, D.C., where he served as Vice President of Marketing for the Independent Petroleum Association of America, the national organization for the independent oil and gas industry. He also served as Executive Vice President of the West Central Texas Oil & Gas Association in Abilene from 1981 to 1986.
He earned a Bachelor of Arts degree from the University of North Texas after serving in the U.S. Army Security Agency.
He worked as Managing Editor of The American Oil & Gas Reporter, and for several newspapers, television and radio stations in Texas. He authors a column concerning energy issues, which appears in the Fort Worth Business Press, San Angelo Standard Times, the Journal of North Texas, the Graham Leader, Wichita Falls Times Record News and the Midland Reporter Telegram.
 

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