Say Anything Blog

BISMARCK - Oilmen have known for decades that a thin layer of dense rock nearly two miles beneath the surface in western North Dakota holds millions of barrels of oil.

Demand never had driven technology far enough to tap the "middle" Bakken Formation. Record oil prices changed that.

"We've known for 50 years the oil is there," said Donald Kessel, vice president of Houston-based Murex Petroleum Corp. "Technology is catching up to the point where you can make it economical."

By all accounts, however, the knowhow is nowhere near perfected on the middle Bakken.

"We are all like blind men feeling our way in the dark now," said Kessel, who holds an oil engineering degree from North Dakota State University.

This is how the free market works. Supply shortages drive up prices. Higher prices spark competition between suppliers who seek out ways to amp up production. Higher production procudes more supply which eventually brings prices back down.

They key is to keep the government out of this process as much as possible. When things like red tape, taxes and price controls are introduced it hampers the market's ability to adjust to supply shortages and high prices.

The solution to the petroleum problem in this country is to role back as much of the regulatory nonsense we have imposed on the market as we can and let the oil companies go about the business of finding oil, refining it and selling it to citizens.