Robert Samuelson at Newsweek (via RCP) says we need to start drilling - now. If we had done this 10-20 years ago, we wouldn't be in nearly the mess we find ourselves today. Most people would be surprised to learn the US is still the third leading oil producer in the world. However, large tracts of potentially available domestic resources, such the the ANWR, are off-limits - largely due to the environmental lobby. The off-limit areas could as much as double US reserves, currently believed to be around 30 billion barrels of oil and 80 trillion feet of natural gas. Why are prices reaching such stratospheric levels?
"The basic cause of exploding prices is that advancing demand has virtually exhausted the world's surplus production capacity, says analyst Douglas MacIntyre of the Energy Information Administration. The result: Any unexpected rise in demand or threat to supply triggers higher prices.
The best we can do is to try to influence the global balance of supply and demand. Increase our supply. Restrain our demand. With luck, this might widen the worldwide surplus of production capacity. Producers would have less power to exact ever-higher prices, because there would be more competition among them to sell."
Another issue is that foreign governments, who aren't terrribly interested in increasing supplies, control over 3/4 of global reserves. While Congressional morons complain about the profits of private oil companies, they then turn around and prevent them from exploring and investing in domestic production.
Investor's Business Daily wieghs in with an editorial (again, thanks to RCP) here. They also point out that US refining capacity, usually running at over 90%, has not been increased with any new facilities since 1976 (they do not mention that existing plants have expanded in that time, however).
There has also been an effective moratorium of the construction of new nuclear power plants, which provide around 20% of our electricity needs - while European nations such as France generate nearly 40% of their needs. while they are expensive, at $3 billion a pop, the electricity they produce ($1.72 per kw/hour)is much cheaper than coal ($2.37) or natural gas ($6.35)plant alternatives.
Added to all that are the threats to increase taxes and the regulatory burden to energy companies, and you have the current recipe for high prices.