In addition, the marginal pricing system, which works so well to take prices to a minimum during periods of oversupply, but which creates volatility and leads prices higher without attracting investment in periods of shortage must be modified with a reliable long-term pricing and supply structure.  This will be necessary to develop foreign sources of supply and the infrastructure for importing gas as LNG; no less should be available for our own citizens for development of domestic supplies.

Dr. Charles A. Kohlhaas is a former Professor of Petroleum Engineering at the Colorado School of Mines and has worked for, founded, managed, and consulted for major and independent companies in the international oil and gas industry.  He has written on questions relating to oil for previous issues of In the National Interest.