Explain how would drilling for more oil in the USA reduce USA gasoline prices?

This question has arleady been posted, but might be misunderstood:





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USA oil companies producing crude oil sell it at global crude oil prices. If they drill and produce more oil, they will continue selling it at global crude oil prices, not at any drastically reduced rates. So, how will that result in lower gasoline costs for American customers?





What will it take to provide substantially lower gasoline costs for American customers, besides reducing worldwide global crude oil prices, which we do not have the capacity to do so? Explain how would drilling for more oil in the USA reduce USA gasoline prices?
Drilling has never been promoted as a long term fix, rather its a short term moderator of oil prices and futures contract pricing. Every barrel of domestically produced oil means that we do not have to compete on an international market for that barrel. As has been pointed out domestic production and our consumption requirements are such that we could not hope to sustain price reductions against OPEC's abilities to counter them.





What we can do is modulate domestic production to counter price spikes. The ability to add supply to the market not only effects price but futures contracts as well. Domestic production also supports the valuation of the dollar. Every barrel of domestic oil produced keeps dollars at home, counters the trade deficit and helps to maintain the value of the dollar.





At this time alternative energy options need to be developed to reduce our addiction to oil. This means all energy options should be on the table for consideration and development, Nuclear, Hydro, Wind, Solar and alternative fuels. In the mean time, during the time it will take to place these systems online we should use the resources and existing technologies we have in the interrum period to limit sky rocketing energy prices. Otherwise we could see a rapid contiuation of the trend of 4to5 dollar per gallon gasoline well beyond these levels along with the negative economic effects brought by such prices as well.








If increased production is not backed by a solid energy policy designed to reduce our consumption of oil then the end result after a moderated period will be a renued rise in oil prices at an even faster rate. (At that time additional drilling won't be an available option anymore)Explain how would drilling for more oil in the USA reduce USA gasoline prices?
Your asking how we can control prices. Well OPEC seems to do a great job of controlling prices thus proving that it is possible if you control a high enough percentage of the worlds oil output. Obviously our influence would be smaller but that doesn't mean that we should not try. If the price stays high than our American companies can make just as much money as our foreign suppliers which is not going to hurt anything. So I ask you what is the down side of trying?





Get ready for the asker who has already made up his mind to voice his strong opinion.



Not to be too simplistic....but the more oil that is on the world market, the lower the prices will be.





Look at the world market for oil now, with the big '; recession '; and drop in demand for oil.





Don't say it cannot happen...it is.
In the long run all oil reserves all over the planet shall exhaust and we shall all die from the consequences of abusing this beautiful planet!


By that time the oil prices will be down to zero.


There will be peace on Earth at long last!





Is that what humans want?
First off, it won't. To begin, off shore oil supplies won't get to us until 10 years after we start researching. Next, the amount of oil we can drill is insignificant to the amount we need. It's like a drop of water in an olympic pool.
You're missing the main tenet of economics; supply and demand. If anyone in the global market produces more, supply goes up, and prices drop. It's really that simple.
it wouldn't; but it would reduce our trade imbalance and our dependence on people who aren't too fond of us
Simple supply and demand... the supply goes up, hence the price comes down.






One way is it would improve our balance of trade, which would increase the value of the dollar and petro prices would drop relative to the dollar.





Of course, it would take years to happen plus demand in other countries and dwindling supply would mean that no matter what we do prices would go up. But we would be better off with respect to the rest of the world.





Then again, we could always do just as much good by cutting our current accounts deficit and conserving petrol. But the word ';drill'; only has 5 letters and is much easier for the average american, and in particular, the average Rush Limbaugh ditto head, to comprehend.