“We can’t drill our way out of our energy problem.” This oft-repeated mantra may have superficial appeal. However, on closer examination, it reflects an abysmal grasp of energy and economic facts by special interests that exert far too much influence over U.S. policies.
If only their hot air could be converted into usable energy.
Drilling won’t generate production overnight. But it will ensure steady new supplies a few years hence. Unlike electricity generation from wind and solar, hydrocarbon development is not an intermittent process. It is 24-7 every month, every year.
Simply announcing that America is finally hunting oil again would send a powerful signal to global energy markets. It would also tame speculators, many of whom bet that continued U.S. drilling restrictions will further exacerbate the global demand-supply imbalance and send prices even higher for “futures” (under which a person pays a specific amount today, with the expectation of selling a commodity on a future date at a higher price).
Pro-drilling policies would likely bring lower prices, as did past announcements that Brazil had found new offshore oil fields, that Iraq would sign contracts to increase oil production, and that hydraulic fracturing had unlocked enormous new U.S. supplies of natural gas.
Conversely, news that supplies are tightening – because of sabotage in Nigeria’s delta region, for example, or continued bans on leasing American petroleum – will send prices upward.