Just for grins, I dumped the daily ANS (Alaska North Slope) west coast crude oil price and production data into a spreadsheet and graphed out the data. The results are below:
So while production, which accounts for roughly 12% of domestic production, slowly dropped by about 100,000 barrels/day, the price did not track along with production. It would appear that small (1%-2%) deviations in production have no correlation on price (Note to Senator McCain – this would indicate that a “drill here, drill now” program would have little impact on oil prices).
It would appear that production is only loosely coupled to price, and that any correlation is that price has a slight driving effect on production, but that production has little effect on price.
This is only a rough analysis of a small segment of oil production and price, and should be treated carefully. Oil is, to a great extent, a global commodity and regional analysis is by nature somewhat suspect. But by parsing the segment to strictly ANS production and price some general ideas can be inferred.
If you look at last summer’s data, ANS production in September dropped by nearly 30% compared to the spring and early summer of 2007. At the same time, the price of ANS crude dropped slightly but was effectively flat. The return to full production in the October timeframe was actually accompanied by an increase in price.