4 ms·
There are a few points missing from this analysis: 1. Oil prices are subject to price elasticity, that is, the relationship is not a linear one. For example,
by patrickg-zill 18y ago
There are a few points missing from this analysis:
1. Oil prices are subject to price elasticity, that is, the relationship is not a linear one. For example, 10% more oil on the market than is being bought, would not reduce prices by 10%, it would reduce prices by perhaps 25%.
2. Drilling is not solely about oil price. The reason that drilling will occur is that domestic oil production means more total dollars going into the US Treasury. There are royalties and other taxes, not to mention taxes on employment (humans, not robots, build the rigs and operate the machinery).
Right now, when the USA sends $500Billion per month, or whatever the number is, overseas to pay for foreign oil, the US gov't gets virtually none of that in taxes or royalties, and even the follow-on effects of Saudis buying our goods are weak. Domestically produced oil has much more positive effects on the US economy, per-barrel.