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Sunday, March 25, 2012

That's Why We're The Alternative Media

The Associated Press, as is its established custom, came to Barack Obama's defense the other day.  See "More US drilling didn't drop gas price," by Seth Borenstein and Jack Gillum.  Their finding?

"If more domestic oil drilling worked as politicians say, you'd now be paying about $2 a gallon for gasoline. Instead, you're paying the highest prices ever for March."

Weblogger "JustOneMinute" reviewed the AP analysis and came up with this:
Oh, for heaven's sake - the question is, does additional US production result in lower prices than would have otherwise prevailed? If, just to seize an example, producers only ramp up US production in response to shortages and rising prices elsewhere, a simple statistical analysis such as done here will "prove" that more production is always associated with higher prices.

Well - Obama's energy plan calls for more investment in clean energy and increasing automobile fuel efficiency standards. So we eagerly await the next AP "Fact Check" where they analyze the correlation of rising CAFE standards and clean energy output with gasoline prices.

My guess - since we have a record level of solar and wind output yet gasoline prices are also at a record high, the statistical correlation will be clear - all this "clean energy" investment has increased gasoline prices.

And has the AP failed to notice that gasoline prices have been spiking since electric cars hit the streets and Obama announced stricter fuel economy standards? Surely the conclusion is inescapable - this push for fuel efficiency is driving gasoline prices through the roof.

This is what I've learned from my decades working in the capitalist marketplace:

Just as Demand does, so Supply affects price.

Because U.S. production - in the big picture - hasn't been consequential enough to drive down global prices, production on a much larger scale than we've seen in the last 36 years (to use the AP's data set) will certainly drive down the price of oil. And with it, the price of gasoline.

It is an absolute certainty - all other factors remaining constant (demand never being constant).

The Associated Press wants Obama to look good and not be blamed for the gas crisis that he could have mitigated. In attempting to shield him the AP brings much-deserved ridicule on itself.

Way to go, fellas.

And here's to the alternative media.  Without them we'd never get the true story.