“No,” Dr. Borenstein writes in a follow-up e-mail. “Cutting US demand ‘tomorrow’ by 1 million barrels would have that effect. But the drilling restrictions [imposed by the Obama Administration] don’t have such an immediate impact.”
Increasing oil production by 1 million to 2 million b.p.d. – the high end of expectations – “would have a much smaller effect” on prices if it occurred over five to 10 years, the more realistic scenario, he writes.
“Boosting US supply, realistically, will not have a noticeable effect on the world price of oil,” he notes. “It still might be worth doing because it creates real economic value (the oil is worth a lot) – but not because it will significantly reduce oil or gasoline prices. It won’t.”
