Oil Prices
Spec Bowers emails Glenn Reynolds this point:
Opponents of drilling argue that it will take 5-10 years for that oil to become available. What they ignore is that current prices are affected by the perception of future prices. If sellers of oil begin to think that oil will be priced at say $90 per barrel 5 years from now, they realize that they are better off selling now at $80 instead of leaving the oil in the ground.
That is useful thing to remember, pricing of oil is made with the knowledge of the opportunity cost of selling it now versus selling it later. While there are some pretty big questions about Saudi Arabia’s production capacity and availible reserves, it is certain that the more valuable they believe the oil will be in the future, the less incentive they have to produce more of it now.
In many ways, that is the importance of ANWR. Not how much oil it will produce, but how willing America is to use availible resources in trade for some environmental risks. ANWR is a symbol that we don’t value domestic production highly at all. It is true though that it was the right, at least as much as the left, that chose to make ANWR into this symbol, and I think there might have been better choices.
