Oil is traded on a global market
That is what I am to understand, as well - everybody drills and puts their oil on the global market (thus evening the playing field) and the gas companies buy it.
If we drill (oil companies pay for and reaps the rewards of that risk) and NOT put that oil on the global market, our prices would hopefully go down.
For example, gas prices in Saudi are at 70 cents - because they skim their needs off the top of what they put on the global market.
The point being if our demand on a global market is reduced because of increased domestic supplies, either the price will drop precipitously or OPEC will throttle back on their production levels, in order to maintain a steady price.
It really is not realistic to not be on that global market, unless we can be assured that we would be 100% self-sufficient for petroleum for a long, long time. Even if we were, it is not reasonable to assume that the oil companies would not control their production levels to assure that our domestic prices for crude oil would pretty closely track to the global price.
Remember, if we have a resource that we are hoarding, the rest of the world can punish us in other ways.
The primary advantages I see are twofold:
#1) We would be insulated from interruptions in supply as the result of hostile actions elsewhere in the world (embargo, war, terrorism, etc.). Our prices might rise, but at least the oil would flow.
#2) As balls pointed out in #13, the wealth would not be transferred overseas. As balls didn’t mention, though, it would be a huge cash cow to our federal and state balance sheets, from royalties paid on the production.
Why would you think that?