Presidents, Policies, Prices and Production

Michael Giberson

Robert Rapier posts this chart:

Rapier noted that last week Obama observed the energy production trends:

“Under my administration, domestic oil and natural gas production is up, while imports of foreign oil are down,” Obama added in his statement. “In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security … even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas.”

Notice that Obama doesn’t directly claim credit – he just observes the correlation without asserting causation. (I imagine the phrase “we will continue to look for new ways to partner with the oil and gas industry” generated a few eye rolls among energy producers.)

It takes four to six years, Rapier says, for policies or higher oil prices to bear fruit. So Carter saw a boost in domestic oil production largely due to the Nixon’s push for an Alaskan oil pipeline and the sustained oil price increases that began in 1973. Similarly, he said, current increases in production are largely due to higher prices over the last several years which led companies to green light projects that were sub-marginal at lower prices. (I’d only add to the story a brief nod to technological improvements that are bringing down the cost of drilling and enhancing recovery.)