Business Week: More Drilling Won’t Lower Oil Prices




Double Mountain, Arctic National Wildlife Refuge

Originally uploaded by Thomas Roche

…In case anyone was wondering. Business Week reports on the fact that President Bush and John McCain are both gangbusters in favor of more drilling as a response to high oil prices. So’s Florida governor Charlie Crist, who reversed himself from his previous stance on offshore drilling. Fine, if you want to argue that point…. but don’t argue it with the assertion that it’s a response to higher oil prices now, says Business Week:

Unfortunately, the oil market is far more complex. For one thing, oil production requires enormous investment, and companies such as ExxonMobil, BP, and Chevron won’t start major new projects until it is clear the project can be profitable. Any new domestic supply would take nearly a decade to tap. Moreover, much of the change in oil markets in recent years has come more from trading than fundamentals. Investors have poured vast sums into commodities, driving prices higher and causing many people to blame rampant speculation for the surges.

In other words, the President’s proposals cannot have a significant short-term impact on oil prices, and only a questionable effect in the long run. “It’s five months before Americans go to the polls, and both parties are trying to come up with a solution,” says Stephen Schork, an energy consultant in Villanova, Pa., and editor of The Schork Report, a daily energy newsletter. “But there’s no realistic near-term solution either party can offer.”

Link.

Lots of people, including a significant number of diehard environmentalists, are arguing in favor of nuclear, too, but the same caveat applies — it’ll take a long, long time, and a lot of diesel-driven truckoads of uranium ore, before the first fresh kilowatt flows out of Your Friend The Atom.

Image: Wikipedia.

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