3 must read columns/editorials on gas prices and energy policy by The Journal

The Wall Street Journal Editorial Page continues to be one the best (if not the best) sources for clear, coherent, free market solutions to what troubles us. These three are must reads:

#1: $4 Gasbags

Money quote:

...the U.S. remains one of the only countries in the world that chooses as a matter of policy to lock up its natural resources. The Chinese think we're insane and self-destructive, while the Saudis laugh all the way to the bank.

#2: Drill, drill, drill! by Daniel Henninger

Henninger hits on a lot of the same notes, such as:

At this point in time, is there another country on the face of the earth that would possess the oil and gas reserves held by the United States and refuse to exploit them? Only technical incompetence, as in Mexico, would hold anyone back.

But not us. We won't drill.

#3: The coming oil investment boom by Holman Jenkins

Money quote:

If today's towering price of oil reflects some speculator's bet on a long-term scarcity of liquid motor fuels, this will prove the misguided bet of a lifetime. Hydrocarbons are abundant and can be extracted from living plant matter as well as from their fossil remains. Many oil fields under current technology are considered depleted when they're still 50% full. But technology advances, doesn't it?

Yes, they do Mr. Jenkins. As Julian Simon would say about any commodity:

More people, and increased income, cause resources to become more scarce in the short run. Heightened scarcity causes prices to rise. The higher prices present opportunity, and prompt inventors and entrepreneurs to search for solutions. Many fail in the search, at cost to themselves. But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices eventually become lower than before the increased scarcity occurred.

Oil is a "fossil fuel"? Maybe not.

The National Review's Planet Gore blog points out today that an article in this month's Science Magazine (which The FDC points out is a "peer-reviewed general-science journal"), shows that oil may not be made up of dead dinosaurs as most of us believed.

Unbeknownst to many (excluding The FDC) there are two competing theories about how oil and natural gas is created:

1. Biogenic (the "fossil fuel" theory): Oil is created by the compression and chemical changes in the remains of biological organisms over centuries or millenia.


2. Abiogenic: Oil is created by chemical changes in carbon in the earth's mantle.

Although both theories have been around a long time, the biogenic theory became CW.

The Science Mag article concludes that:

"Our findings illustrate that the abiotic synthesis of hydrocarbons in nature may occur in the presence of ultramafic rocks, water, and moderate amounts of heat."

This article will doubtless inspire more study, and if it is found to be fact will likely drastically change where oil exploration is taking place. The Peak Oil movement will be nervously looking on, and preparing their spin. The FDC believes that the Peak Oil theory is a bunch of hooey, and that subject will be covered here in future posts.

Who knows? Maybe an oil rig will be coming to your backyard, and help you send your kids to college.