Will high prices bring more oil online? You bet. Will that new oil bring prices down? Only somewhat, and only temporarily, because the costs of extraction will remain high. What about alternatives to oil? They certainly exist...but forget about some different-colored liquid that's going to make your old clunker get 50 mpg. The alternatives will either be far more costly or will require a vast restructing of our transportation system.
Do not look for the transition to be cheap or easy.
You know, the downfall of you liberals is always your negativity, pessimism, and lack of faith. This is a can-do kind of country. If we can go from a horse-and-buggy, rail, dirt road economy to an automobile economy with a massive Interstate Highway System, send men to the moon, develop the modern information age infrastructure, etc., I can think we can find a way to make any additional transitions that we need to.
It has NEVER been cheap, as you would understand the term. If it were CHEAP, it would have already been done. If you understood economics, you would not make such a ridiculous statement.
The only people that are impacted by rising prices are those unable (or unwilling) to have their income adjust close to the same rate as prices increase.
People like to do things, like eat and drive cars. The people for whom their ability to eat and drive cars depends upon producing food and gas to sell will figure out substitute products, or another way to keep demand in line with supply. So will consumers. If oil pumped from the ground won't meet the demand for energy at a price the marketplace deems fair, something else will.
Malthus was wrong in the 1820's and he is wrong now.
"Will high prices bring more oil online? You bet. Will that new oil bring prices down? Only somewhat, and only temporarily, because the costs of extraction will remain high."
Costs of extraction is no higher than in 1998 when oil was $10 a barrel. The real difference has been increased demand.
Sowell is preaching supply and demand 101. For some reason, people think the laws of economics dont or shouldnt apply to oil, so his reminders are needed to avoid policy stupidity like attempts to support uneconomic 'alternatives' that are un-necessary wastes of money unless and until they become economical, at which time they dont NEED Govt support.
Synfuels, which we wasted $20 billion on in 1970s/1980s is a great example. Ethanol is another. We wasted billions on solar too. And we waste Congressional money on 'price gouging' in oil, when gasoline is cheaper and has far thinner margins than the bottled water you buy at stores.
Want to see price gouging? Explain $1.29 for a quart of H20!
Actually, I'd like to dispute the claim that
'cheap oil era is over' .... depends on the price level.
If cheap means "under $15" probably true.
If cheap means "under $30" I'd say better-than-even change of being false. Oil probably will be under $30 at some point in the future (in real 2005 terms).
IMHO, short-term forces drove the price up to current levels, and it is unleashing supply and demand adjustments. Those adjustments will force oil prices down again. This has happened many times in oil prices history.
" but forget about some different-colored liquid that's going to make your old clunker get 50 mpg. The alternatives will either be far more costly or will require a vast restructing of our transportation system."
.... actually plug-in hybrids could effecively make cars have over 100mpg relative to oil use (rest being efficiency and use of electricity). So,
500 nukes plants + plug-in hybrids + ANWR + Cali coast + deep water Mexico could end our oil dependence
"Do not look for the transition to be cheap or easy."
I would wager you that the average price of oil over the next 2 decades will be quite below the current $65 a barrel.