Earlier this week, API hosted a conference call with bloggers to discuss rising gasoline prices and to correct misinformation about the factors that figure into the prices Americans pay at the pump. API Chief Economist John Felmy explained that crude oil costs account for 76 percent of the prices Americans pay for gasoline. Although crude oil is a global commodity, Felmy said that the United States is not powerless in dealing with global markets because, in fact, “we’re energy rich and have lots of options.”
In his opening statement, Felmy called for the United States to help put downward pressure on fuel price:
“America’s oil and natural gas companies believe a preemptive surrender to the global marketplace and world events is absolutely the wrong policy…Although the president repeatedly talks of very limited U.S. resources, it’s just not so. Although his rhetoric suggests that he only sees the effect of global markets resulting from decreasing demand through efficiency and conservation strategies, we think there’s a greater effect that producing more oil could have. Markets are driven by expectations, and it’s time the United States began sending the markets the message that America’s serious about developing its ample resources to help exert downward pressure on fuel price.”
Felmy also explained that increasing taxes on oil and natural gas companies could have the opposite effect and actually increase prices at the pump. “I have never understood arithmetic that tells you, you raise an industry’s cost of producing the fuel and it’s going to lower prices,” he said.
For more information, I encourage you to take a look at our new gas prices website, GasPricesExplained.org, and read through the full transcript below. If you still have questions about gas prices, leave a comment on this post or submit your question on Energy Answered.