One of the major issues in this year's election is going to be oil prices and what to do about them. Unfortunately for the Democrats, whose mantra is that George W. Bush has created high oil prices and could lower them again if he wanted to, the economic world actually exists, independently of Democrat rhetoric. In the economic world, then, is where we need to search for analysis of why oil prices are high and might well continue to rise.

In the economic world, oil prices are climbing because demand is growing rapidly at the same time that oil supply is declining. As many publications have reported these past few weeks, oil production from non-OPEC countries is declining at an ever faster rate. Mdexico, Norway, and our own North Slope field will likely run dry within the decade. That would not matter except that new oil production has been slow to develop despite the doubling of oil's barrel price since 2005. Why so? Why aren't thousands of oil exploration companies popping up overnight to go out in search of this liquid license to print money?

Part of the answer is one that George W. Bush stated correctly in yesterday's press conference: Congress is loathe to permit further drilling in North Alaska. The rest of the answer is the same: counties all over the world have been reluctant to approve increased oil exploration and production. Even OPEC, which has agreed to increase its output of crude, has set a production limit, one which significantly falls short of expected demand.
Second, the vast new oil deposits recently found way off-shore under the deep ocean will  read more »