William Tucker on gas prices and markets:
So let's start with a few uncomfortable facts. American oil production peaked in 1970. That's right, 1970, 36 years ago. We briefly hit 10 million barrels a day in that year, then started to slide back. It's been downhill ever since. It didn't matter too much because we were only consuming 12 million bbd at that point. But consumption kept rising and before you knew it we were importing 30 percent of our oil. That's what led to the 1973 Arab Oil Boycott.
Since then, American domestic production has declined to 6 million bbd. We've opened up Alaska, discovered the Overthrust Belt, and built billion-dollar platforms in the Gulf of Mexico. Still, oil production has never approached its 1970 peak again. Prudhoe Bay started declining in the late 1980s and Gulf production has leveled. Basically, we've got nowhere to go but down.
Meanwhile, consumption has reached 18 million bbd. All those improvements in gas mileage have only prevented consumption from rising faster. Americans now drive 50 percent more miles than we did in 1980. We import 60 percent of our oil and will break 66 percent by the end of the decade.
In this situation, it's comforting to blame American oil companies because it preserves the illusion that they are still mighty enough to do something about it. In fact, the oil companies are nothing more than international pedlars. They buy oil in one place and sell it in another. Oil companies own only about 20 percent of their oil these days. Most of it belongs to the countries where it is found - Iran, Saudi Arabia, Venezuela, Nigeria, etc. We can shake our fists at them, but what good does it do?
Read the entire article.