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SHARPLESS: Domestic drilling won’t lower price of gas

Compared to U.S., Canada is rich in oil, poor on price

- - Friday, July 6, 2012

People say more domestic drilling would lower the price of gas. The United States produces less than half of the oil we use domestically; the rest comes from other countries. If we produced more, the price would go down, or so it's said. By that logic, producing all of our oil domestically should score us a hefty discount at the pump. If only there were a country that produced all of its oil, we could look to see how low gas prices could get.

Actually, there is such a country, and it's not far away in the oil-rich Persian Gulf. It's our neighbor to the north. Canada produces all of its own oil and has enough left over to export what it doesn't need. Canada must have much lower gas prices. Exactly how cheap is gas for those lucky Canadian drivers?

Oh, wait. It turns out it's not so cheap after all. The average gas price in Canada in 2011 was $3.42 (U.S. dollars) not including taxes. Our gas was $3.29 (also in U.S. dollars without taxes). So we in the U.S. actually paid less for gas than our Canadian neighbors even though we import more than half our gas and Canada drills all of its own.

But what about the taxes - that must be where it evens out. Canada must not charge much tax since it's independent of other countries. Let's see how much tax Canadians pay on a gallon of gas.

Canadian tax on gas ran a whopping $1.42 per gallon in 2011, compared to U.S. tax on a gallon of gas - a more meager 41 cents. So Canada, a country that gets all of its own oil from its own territory, a country that has maxed out its domestic production potential, charged its drivers more than 3 times as much tax on homegrown gas as the U.S. charged its drivers for gas that came from imported oil.

So if Canadians are paying more, and we import half our oil from other countries and pay less for gas, does that mean importing more oil is the way to lower gas prices? Though that may seem to be the case, that's not how it works, either.

The price of gas is tied to the world oil market, not how much we drill. Economists all along the political spectrum are in agreement. Yet politicians still insist on arguing that more drilling will lower the price at the pump.

They wouldn't have to go far to see the truth with their own eyes. When we drill, especially in frontier areas like the Arctic, we take all the risk and get no discount on gas in exchange. More drilling provides us with more dirty energy and oil spills, not lower prices at the pump. It's time to stop perpetuating this gas-prices myth and start looking for other ways to produce clean energy domestically.

Andrew Sharpless is CEO of Oceana, the largest international advocacy group working solely to protect the world's oceans.