TruPolitics

Drill Here, Drill Now

This post was written by Edward Mahee. Writing under a pen name, Mr. Mahee is a legal expert and political analyst.

The recent turmoil in the Middle East has given rise to all manner of speculation concerning the future of that region.  With the revolutions in Tunisia and Egypt, as well as uprisings in Iran, Bahrain, Yemen and Jordan, and with rumblings in Saudi Arabia, the world watches with a mixture of awe, hope and apprehension.  But nowhere is there more immediate concern than in Libya, where Moammar Gaddafi is facing the prospect of the end of his four-decade dictatorship.

While much of the impact of these uprisings in the Middle East remains unclear, one effect is already being felt: In the last ten days, the price of oil has risen from $87/barrel to over $100/barrel.  With the price of crude oil likely to remain elevated for the foreseeable future, higher gasoline, energy, and transportation prices are taking hold. As the economy continues to struggle, even the most modest increase in the price of energy can have a huge impact, and risks driving the economy back into recession. 

Few people realize how dependent we are on oil and its distillates. Every person who drives to work, buys food at a super market, or ships anything, in one way or another pays for it through the price of oil.  Without oil, much economic activity would grind to a halt. 

It is therefore striking that Americans tolerate a system where so much of our livelihood is dependent on oil, when so much of that oil comes from places that are unfriendly to the United States and/or extremely unstable. While the majority of oil consumed by Americans comes from domestic sources, Canada, or Latin America, the interruption of the production of oil anywhere affects the price everywhere since oil is priced on commodity exchanges.  It is basic supply and demand. 

There are thus two ways to reduce oil’s price – increase supply or decrease demand.  Since the 1970s, when President Carter’s advice to the American people was to wear sweaters in response to an oil crisis, we have been encouraged to reduce our demand for energy. Fine. But to keep the economy moving, we need to move things, and to move things we need oil.  At some point, we can only reduce demand so much.

It’s time for the American people to seriously consider increasing the total supply of oil by easing restrictions on drilling, oil shale production and other methods of oil production and distillation.  This will bring jobs, secure our energy supply, and bring the price of oil down over time.  While some get upset over the prospect of increasing domestic oil production, we must face the facts: Short of a major technological breakthrough, American productivity will demand oil. Meaningfully curbing oil demand is difficult, if not impossible—we now must embrace the other side of the equation. As the debate is brought home to struggling Americans paying close to $4 per gallon and facing rising food prices, it is time we take a sober look at supply. 

-Edward Mahee for TruPolitics.net