CBO Report: Boosting Oil Production Won’t Protect Americans from Gasoline Price Shocks

More domestic drilling does not make America less susceptible to global supply disruptions or protect consumers from gasoline price volatility, according to a new analysis from the Congressional Budget Office.

The CBO report reviewed different policies intended to make the country more energy secure, concluding that the only effective tool for shielding businesses and consumers from price spikes is to use less oil.

Because oil is sold on the global market, CBO concludes that increasing domestic oil production would do little to influence rising gas prices in the U.S.

These findings back up historical experience. According to an analysis of 36 years of gasoline prices and domestic oil production conducted by the Associated Press, there is zero statistical correlation between increased drilling and lower prices at the gas pump.

The CBO report creates a dilemma for drilling proponents. Even if increased drilling did substantially lower gas prices — which it has not – the agency says those lower prices would actually make the country less secure from price shocks:

Policies that promoted greater production of oil in the United States would probably not protect U.S. consumers from sudden worldwide increases in oil prices stemming from supply disruptions elsewhere in the world, even if increased production lowered the world price of oil on an ongoing basis. In fact, such lower prices would encourage greater use of oil, thus making consumers more vulnerable to increases in oil prices. Even if the United States increased production and became a net exporter of oil, U.S. consumers would still be exposed to gasoline prices that rose and fell in response to disruptions around the world.

In contrast, policies that reduced the use of oil and its products would create an incentive for consumers to use less oil or make decisions that reduced their exposure to higher oil prices in the future, such as purchasing more fuel-efficient vehicles or living closer to work. Such policies would impose costs on vehicle users (in the case of fuel taxes or fuel-efficiency requirements) or taxpayers (in the case of subsidies for alternative fuels or for new vehicle technologies). But the resulting decisions would make consumers less vulnerable to increases in oil prices.

The solution is clear: the only way to make America more energy secure is to use less energy.

Even Mitt Romney understood this in 2007 when he admitted that “these high gasoline prices are probably here to stay” and advocated 50-mpg fuel efficiency standards, public transportation, electric vehicles, and renewable alternatives.

However, today, Romney champions opening up virtually every possible area of the U.S. to oil drilling — disingenuously claiming it will make consumers more secure.

“The best thing we can do to get the price of gas to be more moderate and not have to be dependent upon the cartel is: drill in the gulf, drill in the outer continent shelf, drill in ANWR, drill in North Dakota, South Dakota, drill in Oklahoma and Texas,” Romney said at a recent campaign stop.

Even as the analysis piles up showing that increased domestic drilling is not an effective solution to high gas prices or energy security, political leaders continue to repeat these false claims.

We need creative, proven ideas to help us make America more efficient and less dependent on oil — not a hollow Drill-Baby-Drill mantra that does nothing to address the problem.