A major component to relieving upward pressure on gasoline prices in the US will come from increasing domestic oil production and not from raising taxes, American Petroleum Institute Pres. and Chief Executive Officer Jack Gerard told reporters Mar. 20 during a conference call from Washington, DC.
He said President Barack Obama's administration needs a "reality check" as well as a revision to the unclear signals it is sending the market. This is something that US voters understand as well, Gerard noted, citing statistics from a poll conducted earlier this month by Harris Interactive on behalf of API among 1,009 registered voters in the US.
"Voters understand that raising taxes is not a solution for high gasoline prices," Gerard said, adding, "No economist in the world will tell you gas prices can be reduced by increasing taxes, and the Congressional Research Service just released a study saying so," Gerard said.
"A true all-of-the-above energy strategy would include greater access to areas that are currently off limits, a regulatory and permitting process that supported reasonable timelines for development, and immediate approval of the Keystone XL pipeline to bring more Canadian oil to US refineries. This would send a positive signal to the market and could help put downward pressure on prices," he said.
A large majority of these polled voters, API said, "also believe that more US oil and natural gas development could reduce gasoline prices (81%), lead to more American jobs (90%), and enhance America's energy security (84%)."
Gerard said, "Most US resources have been placed off-limits. The US oil and natural gas industry is currently allowed to explore, develop, and produce on less than 15% of the federal offshore areas. More than 85% of those areas are off limits, denying all Americans the benefits of producing those resources—benefits like greater supplies of crude oil and natural gas, job creation, and significant returns on our treasury in taxes, rents, royalties, and bonus bids."
Market perception
The very notion that the Obama administration is proposing the release of oil supplies from the nation's Strategic Petroleum Reserve or asking other countries, such as Saudi Arabia, to boost oil production, is a "clear admissions that supply matters" in the case of relieving gasoline price pressure, Gerard said.
Markets are largely driven by perception, Gerard said, and when Obama in his early days in office sent out the message to the market that oil and gas production from the Gulf of Mexico, for example, would be higher today than it was then, that is part of the reason we're experiencing higher gasoline prices in the US.
To illustrate this point about clear market signals, Gerard recalled the example of when US gasoline prices were surpassing $4/gal during George W. Bush's presidency, his administration lifted the moratorium on offshore drilling and in a matter of days, oil prices fell by $15-16/bbl.
"Suggestions that the US has meager domestic energy resources, or lacks the ability to safely produce greater amounts of oil and natural gas are wrong," Gerard stated.
Gerard also used the conference call as an opportunity to announce the launch of an API-backed campaign and web site (www.gaspricesexplained.org) that would assist the American public at large with their questions about rising gasoline prices and the nation's energy situation. "We think some of the important facts about our domestic energy situation are being lost in the political rhetoric surrounding gasoline prices," Gerard stated.
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