Drilling

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  • 20 Experts Who Say Drilling Won't Lower Gas Prices

    Blog ››› ››› JOCELYN FONG

    gas pumpIn a pretty impressive act of journalism, the Associated Press recently conducted a "statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production." The result: "No statistical correlation between how much oil comes out of U.S. wells and the price at the pump." It's neat to see math cut through the talking points and get straight to the truth of the matter -- which is that expanding drilling is a fundamentally ineffectual response to gas price spikes.

    Given that changes in U.S. oil production don't move gasoline prices, it should be clear that U.S. government policies related to drilling are of even smaller consequence. Indeed, 92 percent of economists surveyed by the Chicago Booth School of Business agreed this week that "changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies."

    Still not convinced? How about another 20 economists and analysts from across the political spectrum who will tell you the same thing:

    • Ken Green, American Enterprise Institute, "If the U.S. produced more of its own oil, it would probably reduce imports, but it's not likely that it would reduce prices ... We probably cannot produce so much oil to exert downward pressure on prices compared to the world market."
    • Peter Van Doren and Jerry Taylor, Cato Institute: "Sure, more domestic oil creates the possibility of fewer refined imports tied to the price of Brent crude, but given that the price of Brent sets the price for crude generally, the result would be more profit for domestic crude producers rather than significantly lower gasoline prices for Americans (not that there's anything wrong with that)."
    • Doug Holtz-Eakin, American Action Forum: "Domestic action to increase production will not lower gas prices set on a global market."
    • Christopher Knittel, MIT economist: "There are not many markets where the United States can't impose its will on market outcomes ... This is one we can't, and it's hard for the average American to understand that and it's easy for politicians to feed off that."
    • Pinelopi Goldberg, Yale economist: "US domestic policy has only tiny effect on the world price of oil. US foreign policy is probably more relevant than energy policy."
  • The Cleveland Plain Dealer Misses The Mark On Kasich's Fracking Tax Proposal

    Blog ››› ››› BRIAN POWELL

    In Sunday's Cleveland Plain Dealer, Statehouse Bureau Chief Reginald Fields penned a 1600+ word article describing Ohio Governor John Kasich's (R) new proposal to impose a modest tax on fracking and give a personal income tax reduction that would be tied to the amount of natural gas production. Fields cited seven conservative or Republican sources, framing the controversy around a largely manufactured conflict between Kasich and the anti-tax conservatives of his political base. Meanwhile, Fields entirely ignored any discussion about the public health and environmental costs of Kasich's plan. Fields also failed to acknowledge ethical concerns over linking Ohio citizens' financial well-being with the potentially dangerous industry practice of fracking.

    Fields summarized the bill:

    Ohio Gov. John Kasich will propose a new tax on a form of oil and gas drilling known as horizontal fracking and then use the fresh revenue to give a personal income tax cut to Ohioans, The Plain Dealer has learned.

    The complicated plan also would make changes to various existing taxes petroleum companies pay for pumping out oil and natural gas from beneath Ohio. And it even contains a tax break for some smaller operators, according to documents obtained by The Plain Dealer and confirmed by the governor's office.

    [...]

    The revenue would go into a newly created fund requiring legislative approval, which would be used to support the tax cut. The income tax cut would apply when there is annual growth on revenue of at least one-third of 1 percent. If there isn't sufficient growth, Ohioans wouldn't get the tax cut, but the pool of money would carry over to the next year.

    The governor's office is projecting the first income tax cuts could come in calendar year 2013, but they are more likely to start in 2014 -- the year Kasich is up for re-election.

    So, the amount of the income tax cut would be tied the amount of oil and gas extracted and according to market prices for those products.

    Fields claimed that Kasich's plan is "expected to get a heap of criticism from conservatives who see it as nothing more than a tax hike," but the sources he used to back this up don't bear out that narrative. He quoted a spokesman for Ohio House Speaker William G. Batchelder (R), who is reserving judgment until he can "see what the actual language of the bill is," and briefly noted that Senate President Tom Niehaus (R) is "said to have" concerns about the plan. Meanwhile, Grover Norquist's Americans for Tax Reform, which was "consulted" about the proposal, is tentatively approving the tax plan and giving Kasich the "benefit of the doubt" regarding any potential concerns about increased taxation. This lukewarm reaction to Kasich's proposal hardly qualifies as "a heap of criticism."

    Fields did note real criticism coming from the Oil and Gas Association, whose members would face a slight increase in the cost of drilling in Ohio. But this predictable position adds little to a serious policy discussion.

    Fields gave little attention to voices who believe that a policy discussion on fracking should be a little broader than the question of 'a nominal tax vs. no tax at all.' The article gave a cursory nod to two House Democrats proposing an alternative plan to tax the industry at a higher 7%, but was entirely devoid of any discussion about the external costs of fracking that will be borne by taxpayers. The practice of fracking may be responsible for toxic drinking water and increased earthquakes. If Ohio's taxpayers are footing the bill for public health hazards and infrastructure damage, among other costs, then a couple extra bucks off their income tax won't mean much.

    Nor did Fields give any attention to the ethical dilemma behind the policy Kasich is proposing. By tying the natural gas industry's output to income taxes, he would provide the Ohio electorate with a perverse choice: accept the risks that fracking poses to the environment, public health and worker safety -- or pay higher taxes.

    Ohio is just beginning to address the impending explosion of fracking in the state. Hopefully, the Cleveland Plain Dealer will provide a more balanced discussion of the facts in the months ahead.

  • FLASHBACK: Fox News On Gas Prices In 2008

    Blog ››› ››› SHAUNA THEEL

    Following GOP strategy, Fox News is again blaming the Obama administration for rising gasoline prices -- a claim that has been repeatedly debunked by energy analysts. But back in the summer of 2008, when the average U.S. gasoline price hit a record high of $4.11, Fox said that "no President has the power to increase or to lower gas prices."

    In 2008, Fox's coverage occasionally even mirrored the facts: expanding domestic oil drilling will not significantly lower prices, and the only way to reduce our vulnerability to gas price spikes is to use less oil. Perhaps there was more room for reality-based coverage at Fox when there wasn't an incumbent president to defeat?

    In case you missed it, here's how Fox is covering gas prices now:

  • Brent Bozell Now Making Up Oil Statistics

    ››› ››› TODD GREGORY

    During a discussion of gasoline prices, frequent Fox News guest Brent Bozell claimed that U.S. oil production has fallen under President Obama. In reality, the opposite is true: after increasing every year since 2009, oil production is at an eight-year high; gas prices continue to rise because they are determined by a world market, not by U.S. production.

  • What Reporters Are Getting Wrong About Gas Prices

    Blog ››› ››› JOCELYN FONG

    cnn screengrabLast month the New York Times' public editor solicited reader input on whether reporters should challenge false statements made "by the newsmakers they write about." The overwhelming response from media commentators was, "YES, OF COURSE." Even Jill Abramson, the executive editor of the Times weighed in to say: "The kind of rigorous fact-checking and truth-testing you describe is a fundamental part of our job as journalists," adding, "Could we do more? Yes, always. And we will."

    That's good to hear because research out of Ohio State University indicates that passive reporting which "simply lists competing claims without offering any idea of which side is right," may cause readers to become disillusioned about their ability to determine the truth.

    But in at least two recent articles, the Times uncritically reported Republicans' claims that the Keystone XL pipeline would hold down gasoline prices, giving no indication that in fact, experts say the effect would be miniscule at best.

    This tolerance for unsubstantiated claims about gas prices is part of a larger pattern among many news outlets: In an effort to capture the political argument of the day, journalists often miss the larger, more interesting, and more important story.

    What is the origin and the nature of our problem with gas prices? What can we do about it? Who supports and opposes those solutions? Who benefits from the status quo? If reporters aren't framing their gas price coverage around these questions, they're serving someone -- but it's not the public.

  • Fox Still Struggling With Basic Chart Concepts: Gas Price Edition

    Blog ››› ››› SHAUNA THEEL

    In a segment falsely blaming Obama for rising gasoline prices, Fox News' America's Newsroom aired the following chart yesterday. It shows three data points -- including the vague "last year" -- plotted nonsensically on the x-axis:

    Fox News

    "Last year" refers to gas prices last February; Fox's chart omitted what happened in the 13 months between February 2011 and last week. Here's how Fox's source, AAA, displays the data (green line):

    Source: AAA

    Previously:

    Fox News Resumes Perennial Gas Price Charade

    Today In Dishonest Fox News Charts

    Worst chart I've seen all day

    Dishonest Fox Chart: Food Stamps Edition