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If your friend thinks there's tons of oil just waiting for someone to turn a spigot in TX, AK and offshore, tell him to put down the pipe. The easy to extract oil in the US has already been extracted. Most US oil wells that are capped are capped because there isn't any more oil to lift, or what there is would cost more to lift than it could be sold for. The oil we have is mostly in hard-to-access places like northern Alaska or in difficult geology like oil shale. In Saudi Arabia by contrast, you could get oil out of the ground almost as easily as Jed Clampett.
By the way, for a little perspective on the high cost of gas, in constant 1982-1984 dollars, as of January 2004, the average price of gasoline was 88.3 cents/gallon. The average for 2003 was 89.0 cents/gallon. And working backward:
2002 - 80.1
2001 - 86.4
2000 - 90.8
1999 - 73.3
1998 - 68.4
1997 - 80.4
1996 - 82.1
1995 - 79.1
1994 - 79.2
1993 - 81.2
1992 - 84.8
1991 - 87.8
1990 - 93.1
1989 - 85.5
1988 - 81.4
1987 - 84.2
1986 - 84.9
1985 - 111.2
1984 - 115.3
1983 - 123.0
1982 - 132.7
1981 - 148.8
1980 - 148.2
1979 - 121.5
1978 - 100.0
In other words, except for a few years when the price of gas was exceptionally low, gas today is as cheap or only a little more expensive than its average for the last 20 years, and is significantly less than what it was in the 1970s and first half of the 1980s. Other data I've seen carries this trend back even further, and notes that in constant dollars, gas is as cheap now as it was in the 1950s. Factoring in growth in per capita income, and adjusting it also for inflation, people generally have more than twice as much money to spend on gas. So gas has held almost steady in price almost 50 years, while people have much more money to spend on it. No wonder consumption is relatively inelastic.
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