So rising oil prices are more than just an irritant or even an ominous nick out of the GDP. They're an invitation to corn and coal and hydrogen. For anyone with a fresh idea, expensive oil is as good as a subsidy - with no political strings attached. Indeed, every extra penny you pay at the pump is an incentive for some aspiring energy mogul to find another fuel.
For the better part of a century, cheap oil has fatally undercut all comers, not to mention smothered high-minded campaigns for conservation, increased efficiency, and energy independence. But growing demand is outrunning the oil industry's carefully computed supply curves, bidding up long-term expectations for the price of energy. The long term may not mean a lot when you're standing at the pump, but the oil industry lives in a world where big projects take a decade to build and the checks that pay for them have eight or nine zeroes. Crude hit $70 a barrel last August, but oil companies have learned the hard way how quickly prices can crash. They adjust their expectations accordingly - downward.
For years, the industry's long-term benchmark was $20 a barrel in today's dollars; to get a green light, new investments needed to be profitable at that level. Now the industry is counting on prices to settle near $30. Some aggressive CEOs believe they'll stay as high as $40.
The changing outlook opens horizons - for conventional drilling, sure, but also for alternatives. Some new technologies merely produce more crude. But others tap energy supplies that have nothing to do with black pools under the Middle East.
Read the whole thing.
Meanwhile, our idiot Senators (including North Dakota's own Byron Dorgan) have been in Congress berating oil industry executives over "excessive profits" and threatening to re-distribute said profits to the citizenry with a new tax
Though once the dollars brought in from that new tax reaches the greedy hands in Congress its hard to say how much, if any of it, would actually reach Americans.
Regardless, one day this country will have to find an energy source other than petroleum. It might be 10 years down the road, or it might be 100 years. Either way, the day is coming and when it comes we're going to need alternative sources of energy ready and waiting. Only they won't be ready and waiting if our government keeps interfering with the energy industry's ability to develop them.
The politicians in this country need to back off. They need to quit pandering to voters by playing the "knights in shining armor" who are going to "save" Americans from high gas prices. They might be able to bring prices down and make voters happy in the here and now, but in the long run it will cause us nothing but trouble.