The surge in U.S. crude production has benefited the 1%, bringing profits to oil companies and investors while leaving the rest of the country paying high prices at the gas pump.
Liam Pleven and Gregory Zuckerman report in the Wall Street Journal that the uptick in domestic oil production has brought "a windfall to some refiners and their investors" while consumers are still paying on average $4 per gallon at the gas pump, a discrepancy analysts and investors don't expect to see change soon.
Pleven and Zuckerman cite domestic refinery owners HollyFrontier Corp., which "saw net income jump 149% to $502 million year over year in the second quarter," and Tesoro Corp., which "reported a 77% leap to $393 million" in four years.
Severin Borenstein, co-director of the Energy Institute at the Haas School of Business, told the WSJ that even if more pipelines were available to pump out the landlocked oil produced in the Midwest, the benefit to gas consumers would be "in the pennies."
The analysis documenting lack of causation between increasing domestic oil production and lower gas prices is not new, as Stephen Lacey notes at Think Progress:
Experts are saying, well, what experts have been saying for some time. Even if we opened up every inch of the U.S. to oil drilling, there would be minimal downward pressure on gas prices. According to a 2009 report from the Energy Information Administration, an aggressive offshore drilling policy would only lower the price of a gallon of gasoline by about three cents in 2030.
A recent investigation from the Associated Press found “no statistical correlation between how much oil comes out of U.S. wells and the price at the pump” when looking at more than three decades of data. The New York Times and the Wall Street Journal have also reported extensively on the failure of domestic oil drilling to lower gas prices.
Despite this documentation, Lanhee Chen, policy director for the Romney campaign, writes: "Increases in North American oil production will not only lead to lower oil prices worldwide, but also have a particularly strong effect on the price at the pump here in America."