Sullivan's bogus claim that higher Alaska oil production will lower prices
Sen. Dan Sullivan can’t stop himself from lying about gasoline prices, peddling a fantasy that increased oil production in Alaska will lower prices at the pump in the distant future.
The cost per gallon for gasoline, diesel fuel and heating oil in Alaska has nothing to do with the pace of Alaska oil production, which is currently about 0.5 percent of world oil production.
Let’s say that Alaska oil production magically doubles in the years ahead and rises to about 1 percent of world oil production. Sullivan claims that Alaska oil production will rise to about 1 million barrels a day in the next decade.
Let’s say that happens. It will not change the price of gasoline, diesel and heating oil in Alaska.
Fuel prices in Alaska have risen sharply this year, not because of anything that has happened in Alaska. They are up because of Trump’s war with Iran, which has disrupted the world oil market.
“Sullivan argues that more Alaska energy production, something Trump has aggressively backed, is the answer to lowering costs, though analysts argue that’s generally a long-term solution that won’t yield quick results,” the Daily News reported over the weekend.
It’s true that Sullivan claims more Alaska energy production would lower prices.
It’s not true that “analysts” believe that increased Alaska energy production would lower the world price of oil, though Sullivan makes that claim every day. No “analysts” believe this.
“The best way to address Alaska’s energy challenges is to produce more Alaskan energy by and for Alaskans,” Sullivan said at Trump’s Wasilla rally.
When Sullivan called into a KNOM in Nome last week, he said, “The best way to bring down long-term costs or cost for energy for Alaskans is to produce more Alaskan energy by and for Alaskans, and we're doing that because of policies that I have championed. We're producing more oil. Finally, we're turning around the decline in the Trans-Alaska Pipeline. We are going to get back to a million barrels a day, and that will enable us to have more refining capacity throughout our state for things like diesel.”
What Sullivan says sounds good, but only if you don’t think about it.
The oil produced in Alaska is not “by and for Alaskans.” Most of it is consumed Outside and the proceeds go to Hilcorp, ConocoPhillips and ExxonMobil.
Wherever the oil goes, it fetches the world price, which has everything to do with the 100 million barrels pumped daily worldwide and almost nothing to do with the 560,000 barrels produced daily in Alaska.
Make that 1 million barrels a day and the world price will not budge by pennies.
By the way, the Dunleavy administration is guessing that oil production in a decade will not be 1 million barrels, but about 650,000 barrels per day.
The fiction that Alaskans will see lower prices with higher Alaska oil production falls apart upon simple examination. The Anchorage Daily News and other Alaska news organizations have yet to cut through the campaign blather and make that clear.
Fuel prices are up because of the war in Iran, which was supported by Sullivan. This has nothing to do with the rate of oi production in Alaska.
Meanwhile, Trump is boasting at his campaign rallies that the U.S. oil and gas industry is making “hundreds of billions of dollars” from higher oil prices created by the war in Iran. “We’re making a fricking fortune,” said Trump.
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