Ed Wallace Interview on Oil Prices

Ed Wallace is an author for Business Week Magazine who has written some excellent articles on whether or not gas prices are justified by supply and demand. Turns out that they are not. I conducted a brief interview with him the other day on some of the pertinent questions about new oil drilling.


RL: Ed, do you have a position on whether or not increased drilling, offshore or otherwise (not expected to come online apparently for 11-14 years anyway) would do anything to reduce oil and gas prices? If it's not supply-demand driven, then increased supply should little effect prices, correct?

Also, there is an argument about oil leases. One side says that the oil companies have vast leases, offshore and onshore, that they are refusing to exploit for some reason. At the same time the oil giants are paradoxically screaming to open up more leases. Others say that all existing leases are being fully exploited.

What's your position on these matters?


Ed Wallace: New offshore drilling with not do anything to lower prices.

1. To order a new drilling ship today means you can take delivery around 2013.


2. Permanent rigs for when the oil is found will take even longer to get a hold of.

There is no real outcry for more areas to be opened, as most places already authorized for drilling are not being exploited for the above two reasons.

While today I’ve written about the lack of demand, therefore the market is completely driven by undue and unwarranted speculation, that will not continue to be the case.

I would expect that by 2015, we will look back on today as the good old days for cheap oil and gasoline.