Energy myths explored

Investors Business Daily here explores a number of energy myths in a recent editorial. Can we drill our way out of "this situation"? That depends on what "this situation" means. I don't believe that we can drill for and produce sufficient amounts of oil to meet all of our current and future needs. So we will still need to rely to some extent on "unreliable sources of oil from abroad," as Bob Hope used to say in the Texaco commercials.

But can increased domestic drilling significantly alleviate the current oil supply/demand imbalance? Absolutely. Demand for oil is increasing fastest in other parts of the world -- the Middle East, the Far East, India, and some parts of Latin America. These increases in demand are beyond our control. People in other parts of the world are not going to forego higher standards of living because they raise the worldwide price of oil and gas. Consequently, even if we aggressively pursue conservation measures in this country, world demand for oil will continue to expand.

We can, however, improve the supply-side of the equation by increasing domestic production. Yes there will be lag time before future production comes on line. But the prospect of increased future supplies can have an immediate impact on prices in the futures market (those dastardly speculators). Our only alternative is to continue to watch domestic production decline while world demand increases. Not a pleasant prospect.