Economist Robert Samuelson Says "Start Drilling!"

This is excerpted from the dean of American economists, Robert Samuelson, at realclearpolitics.com.

What to do about oil, as the price soars and is likely to keep soaring? Samuelson says we are almost powerless to affect oil prices, because...

...we didn't take sensible actions 10 or 20 years ago. If we persist, we will be even worse off in a decade or two.

The first thing to do: Start drilling.

The U.S. is the 3rd largest oil producer in the world. We could be producing more:

...but Congress has put large areas of potential supply off-limits. These include the Atlantic and Pacific coasts and parts of Alaska and the Gulf of Mexico...these areas may contain 25-30 billion barrels of oil (against about 30 billion of proven U.S. reserves today) and 80 trillion cubic feet or more of natural gas (compared with about 200 tcf of proven reserves).

What keeps these areas closed are exaggerated environmental fears, strong prejudice against oil companies and sheer stupidity. Americans favor both "energy independence" and cheap fuel. They deplore imports -- who wants to pay foreigners? -- but oppose more production in the United States.

Got it?

The basic cause of exploding prices is that growing world demand has nearly exhausted global surplus oil production capacity.

The best we can do is to try to influence the global balance of supply and demand. Increase our supply. Restrain our demand.

Output from older fields, including Alaska's North Slope, is declining. Although production from restricted areas won't make the U.S. self-sufficient, it might stabilize output or even reduce imports. No one knows exactly what's in these areas, because the exploratory work is old. Estimates indicate that production from the Arctic National Wildlife Refuge might equal almost 5 percent of present U.S. oil use.

Congress complains about high oil profits, but frustrates oil companies from using these profits to explore and produce oil in the U.S. Meantime, high oil prices perversely encourage other countries to cut back on production, to drive up prices ever more.

But it's hard for the United States to complain that other countries limit access to their reserves when we're doing the same. If higher U.S. production reduced world prices, other countries might expand production. What they couldn't get from prices they'd try to get from greater sales.

Oddly, alternatives to drilling are often environmentally worse.

Subsidies to ethanol made from corn have increased food prices and used scarce water, with few benefits. If oil is imported, it's vulnerable to tanker spills. By contrast, local production is probably safer. There were 4,000 platforms operating in the Gulf of Mexico when hurricanes Katrina and Rita hit. Despite extensive damage, there were no major spills.

Our long-term oil problem will remain, although we can make it much better.

But this is not a task of a month or a year. It is a task of decades; new production projects take that long.

If we don't start now, our future dependence and its dangers will grow. Count on it.

But read the whole article, at http://www.realclearpolitics.com/articles/2008/04/start_drilling.html.