THE RIGHT REASON TO INCREASE FEDERAL LEASING

Political friends of the US oil industry are getting carried away with the politics of elevated oil prices.

Political friends of the US oil industry are getting carried away with the politics of elevated oil prices.

They're saying that the price run-up demonstrates the need to unclamp leasing of federal land in the US West, on the Outer Continental Shelf, and in the Arctic National Wildlife Refuge Coastal Plain.

They are surely correct that leasing limits should be relaxed in all those areas.

But the reason has little to do with oil prices at current or any other levels.

Linking prices to leasing creates an implication difficult to defend: that the US might be able to shelter itself against price movement harmful to consumers if it produced more oil and reduced its dependency on imports.

That might once have been so. It might be so to some degree now in the case of natural gas, which is still traded mostly on a regional basis.

But it is not so with oil at the start of the 21st Century.

The US cannot insulate itself from external price influence no matter how much oil is produces within its borders and no matter how much oil it imports relative to consumption.

Trade in oil is international. The price of oil depends on global supply relative to global demand. Influence belongs to consumers and suppliers at the market's margins, who are able to exert that influence intermittently at best-and nearly always in response to distress. No one wields lasting control.

That's not to say that the federal government shouldn't make more of the land under its control available for oil and gas leasing. It should.

It's not to say that the government shouldn't encourage production of as much oil as US geology, intuition, and economics allow. It should do that, too.

It should do so because production of oil turns a natural resource into wealth for companies and individuals, and the creation of wealth generates tax revenues for various levels of government.

Those activities serve national interests, which should be reason enough for the government to increase the amount of land it offers for lease.

Expanded leasing and whatever new production resulted from it would not, however, keep prices of oil products in the US from rising in periods, such as the present, of high and rising intensity in the competition for immediate supply. No one benefits from suggestions that they would.

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