Someone Should Study this Phenomenon, Part 2
A few days ago, I was astounded to find that oil prices had a here-to-for unsuspected (at least by Congress) utility - that they can actually manage demand to help match supply. But this strange phenomenon is even more amazing, because it now appears that higher oil prices also have the ability to stimulate investments in increasing production of this scarce commodity:
The American oil patch, once left to languish during an extended
period of low oil prices, is on the rebound. Wildcatters like Mr.
Bryant are ready to pounce. With oil prices now hovering around $60 a
barrel "” three times higher than they were throughout the 1990s "” the
industry is expanding at a pace last seen decades ago."The oil
industry has changed dramatically in the last 20 years," Mr. Bryant
says. "Barriers to entry have dropped significantly. It doesn't matter
if you've been in the business 100 years or 100 days."Easily
available capital and technology, once the preserve of traditional oil
companies, are reordering the business. Investors are lining up to
finance energy projects while leaps in computing power, imaging
technology and collaborative online networks now allow the smallest
entities to compete on an equal footing with the biggest players."There's
a lot of money out there looking for opportunities," said John
Schaeffer, the head of the oil and gas unit at GE Energy Financial
Services. "It seems like everyone wants to own an oil well now."
Advice to Nancy Pelosi and Maria Cantwell: You may need to study this phenomenon.
