Domestic oil wells are getting a workout

I live in a part of California where there are 3 oil production fields within 90 minutes driving time of my home.  For so many years, I would drive by the oil wells and see all of the oil well pumps sitting idle.  In the past few years, there has been a big change in the level of activity at these oil fields.

Today, I drove through the oil fields that surround the city of Taft, California.  This is one of the areas that looked abandoned 10 years ago.  What I saw today was a significant number of oil well pumps operating.  You can’t drive through this area during the day without seeing tanker trucks on State Highway 33, which are likely supporting the drilling operations.  There were a number of drilling rigs being worked on.  It’s a big change from a few years ago when all the equipment looked like it belonged in a ghost town.

People who are in favor of increased domestic drilling for oil and natural gas seem to believe that if we produce more oil domestically, the price of gasoline will drop.  My guess is that the activity I’ve seen at my local oil production sites is not unique.  I’m quite sure that this increased activity is happening all over the country.  The reason these sites were not used for so many years was because it was less expensive to import foreign oil than it was to produce it domestically.  The price of oil is high enough for the oil companies to justify reactivating domestic production facilities.

Now, if domestic production has increased during the time I’ve seen the renewed activity at these domestic oil fields, thinking as the drill here – drill now folks think, the price of gasoline should be going down.  But, during the past 2 years, the retail price of gasoline has risen just about $1.00 per gallon.  I’m afraid I’m not seeing the financial benefit to consumers of increased domestic production.

The problem with the belief that more domestic production will lower gasoline prices is the global oil market.  It doesn’t matter where oil is produced in the world.  The commodities markets set the going price and that’s what everyone pays for the oil.  Any oil produced here is not going to be sold here if the oil companies can get a better price selling to China, for example.

If you’re in favor of expanded domestic production of oil and natural gas, it’s likely there’s nothing anyone could say to change your point of view.  You have chosen to trust what politicians and the oil companies are telling you.  The oil companies continue to break records with their profits and their profits continue to rise as the price of gasoline rises.  Sorry, but  I don’t believe the oil companies or the politicians paid by the oil companies are looking out for our best interests.

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