What Drove Down Gas Prices?

Jordan Weissmann admits that, contrary to the predictions of liberals, drilling has played a role:

There had never been much of a statistical relationship between U.S. oil production and what Americans paid at the pump. But with crude prices crashing, gas down to about $3 a gallon, and the International Energy Agency declaring that we have reached “a new chapter in the history of the oil markets,” it is time to acknowledge that the left in some respects was wrong, and that drilling in North Dakota, Texas, and beyond has actually helped cut the price of gas. …

The combination of U.S. drilling and a global slowdown didn’t necessarily have to end in plummeting oil prices. Traditionally, OPEC members have cut their production in the face of global gluts in order to keep their profits high. But now, OPEC appears to be fraying. Earlier this month, Saudi Arabia shocked much of the world by cutting its crude export prices to the U.S., in what was interpreted as an attempt to protect its market share and possibly put pressure on America’s domestic drillers. Instead of trying to buoy the price of petroleum, the Saudis are now helping drive it down further in order to save their own revenue stream.

Plumer passes along word that “US is now producing more crude oil than at any point since 1986″:

Worldwide, only Russia and Saudi Arabia now pump out more crude oil, and the US is quickly closing the gap. (Sometimes you’ll see news stories saying that the US is already the largest oil producer. This is only true if your definition of “oil” includes things like natural gas liquids — which are still useful, though not exactly the same as crude oil.)

But Max Ehrenfreund finds it worrisome “that no one is buying all that oil”:

The unfortunate truth is that low prices for gasoline are a symptom of a sickly global economy. It isn’t just gas prices that are falling as consumers make do with less and businesses put off new investments in Europe, China and Japan. Metals such as copper, silver and platinum are cheap, too, and so are crops like corn, soybeans and wheat.

Earlier Dish on $3-a-gallon oil here.