The arguments swirling around right now about what to do about gas prices seem to be “increase drilling” and “build Keystone.” Neither of these will bring down gas prices one iota. When oil companies hear people say “let them build pipelines so that prices will go down” they essentially just chuckle to themselves and think we’re idiots… the reason they want to build Keystone is because all the oil being extracted in Alberta and North Dakota right now is essentially just stuck there, which believe it or not is actually beneficial to American consumers… without a pipeline it is too expensive for them to transport it to the coasts where it could reach the global market, and the result is that they wind up having to sell it in the US at the discounted WTI price. Piping it down to the Gulf Coast just means they’ll be able to get it onto the global market and charge the higher Brent price which is the one that is vulnerable to Mideast price shocks (the differential between WTI and Brent is at about $17/brl right now). And this will not decrease prices because the result of increased North American supply on the global market will just be OPEC offsetting it with production cuts to keep the price up. The legitimate arguments for Keystone are that it would create jobs to build it, and that increased domestic oil company profits = economic growth… but it will not bring down prices. The only legitimate ways to actually get prices down at this point would be to:

1) Increase drilling but don’t allow the construction of pipelines to the coasts, so that it becomes artificially too expensive for the oil companies to get the oil onto the global market and they wind up forced to sell it here at the cheaper WTI price (and in the long-term I don’t see how this will fly…)
2) Deal with OPEC somehow so that increases in North American supply from “drill here, drill now” aren’t just offset with OPEC production cuts (and realistically I don’t really see how this will happen… every politician before an election panders about the need to be “tougher on OPEC” but at the end of the day the OPEC members are sovereign countries who can produce or not produce as much as they want and there isn’t exactly much we can do about this unless we want to start a trade war).
3) Figure out how to produce additional oil at sufficient enough volume that adding it to global supply would begin to be too painful for OPEC to offset (they can always cut production to keep the price up but they can only do it up to a certain point because for most of these countries oil is so dominant an export for them that they can only cut production so much before it starts to be legitimately painful). Conventional oil reserves in the US are insufficient to provide this much volume. What is getting very interesting, though, is shale which we have immense amounts of but that until now have been too costly to extract.

Conclusion– We have a ton of shale and also a ton of natural gas. The only serious ways to get prices down at this point are to figure out how to make shale extraction profitable and to figure out how to expand natural gas use. Obama’s idiotic “develop wind and solar but nothing else” approach will not do a damn thing, but neither will “Just Drill More” or “Build Keystone Now.”