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At current prices, remote drilling (ANWR), deep water drilling (OCS), and shale oil and tar sands (most of which is federal land holdings) are all economically viable and we will see those sources tapped.

I agree with you, dear colleague, that we need to open up these resources, but we also have to be realistic about their impact on current prices. From the numbers I've seen, ANWR and the OCS aren't going to increase global supply by more than 3%. While that's nothing to sneeze at, and will help some, we shouldn't kid ourselves into think its some kind of panacea. Long-run oil demand elasticity is estimated to be around 0.4. So even if we increase supply by a generous 5%, that's only going to decrease the price by about 5%/0.4 = 12.5%. Nothing to sneeze at, but not all that impressive, either.

As to Rocky Mountain shale, while developing at least some of it may be just barely positive NPV right now, with oil price volatility being what it is, the option value of waiting for prices to move up is probably too high for any company to seriously undertake any large scale development right now. Hence even if we do start leasing it (as I believe we should), it will be quite some time before anyone chooses to start producing from it. Hence shale oil is likely only to help in a very long run.

What sayest thou?

I agree. Still, since price expectations is one determinant of demand, I think that will shift the demand curve if an announcement of opening up ANWR, OCS, and federal lands to drilling is made. That could have a significant impact by itself without any supply shifts because of increased output. The impact will probably be most felt on the speculators, but also on large consumers (e.g., airlines) who have been hedging their bets in the futures market. Also, most people would be tickled pink to see a $.50 (12.5%) drop in price for a gallon of gasoline. It may be small, but it's still better than a poke in the eye with a sharp stick. For people who drive a lot (e.g., sales people, marketing reps, truck drivers, etc.) it could mean hundreds of dollars each month. Plus it also means that countries that support terrorism get less on each barrel, too.

In short, I really don't care if price only drops a half percent, that's better than nothing. Unfortunately, Congress could care less about us and they won't allow anything that makes us happy take place until after Nov. I say: Throw the bums out!