OK, now that Bush and McCain are making an issue out of opening up currently off-limits area to oil drilling, most notably offshore areas, it’s time for me to address this yet again.

There’s a lot of noise on this issue, and almost all of it ignores the peak oil factor. But first, let me dispense with some of said noise.

The right wingers claim that we should exploit our resources to push down oil prices. If we threw open the offshore areas to oil exploration and exploitation, it would take years, probably 6 or 7 at a bare minimum and likely longer, for any of that oil to reach the market. Not for it to reach the maximum flow, but for the first trickle of black gold to be turned into a usable commercial product. And even then the amount of oil reaching the market will likely result in a minor reduction of oil prices. That’s compared to what they would be years from now without this additional drilling, not compared to current prices; even with this new drilling we could still see prices well above $130/barrel by then, especially if we’re on track for a near-term peak in 2011/2012. So any notion that this oil will return us to cheap prices is ridiculous, although it could be the difference between painfully high and catastrophically high oil prices.

The lefties claim that there will be damage to environmentally sensitive areas. This is no doubt true, in a purely probabilistic sense–there will be at least some damage in some areas–but no one can be sure how bad it will be. They’re also claiming that the oil companies have huge areas of federal lands and offshore areas open to drilling that aren’t being exploited. While I suspect that this is literally true, I’d also guess that at least some of that area is being assessed and explored, but not actually drilled right now, and some has been assessed and determined to be not worth drilling.

So where does this leave us, and what should the US do?

The short answer is that we are once again facing the challenge of cutting through the interminable political noise to find the underlying signal.

The longer answer is bit complicated.

The longer we leave that oil in the ground, the better, as it means less CO2 in the air and more of an incentive (yes, via higher prices and economic pain) to transition away from oil. It also means more oil we can tap if things get truly desperate post peak. But wait, if it takes at least 6 years to develop these oil reserves, then shouldn’t we be starting the process now, when some people (like me) claim that the peak is only 3 or 4 years away? No, because we’re not going to hit a brick wall the day after peak oil is reached. We’ve been on a production plateau for several years already, and higher prices are providing a significant incentive to use less oil in national economies around the world. But to be blunt, we haven’t been truly tested yet by higher prices, and we still have a hell of a lot of low-hanging conservation fruit waiting to be plucked. (For one take from a mainstream economist on how high oil prices could go in the short run, see $7 US gasoline in four years.)

My long-standing prediction is that we will surely drill for that oil (and natural gas), as well as reserves just about anywhere on the planet we can find and extract them. I don’t see a politically viable path for the US and the world to transition away from oil (and natural gas) consumption quickly enough to avert vastly higher prices and economic pain. The demands from consumers for policymakers to “do something” will overwhelm everything, including the widely recognized, desperate need to reduce CO2 emissions.