As President George W. Bush considers repealing a ban on drilling off most of the coast of the United States, a shortage of ships used for such drilling promises to impede any rapid turnaround in oil exploration.
Slow growth in oil supplies, at a time of soaring demand, has been a major factor in the spike in oil and gasoline prices. In recent years, a global shortage of drill ships has created a critical bottleneck, frustrating energy company executives and constraining their ability to exploit known reserves or find new ones.
Two decades of underinvestment due to low oil prices is having profound effects, but with prices this high, the investment is flowing now. There's plenty of oil in the world and oil companies are finding it. It is only a matter of time until supply catches up with demand.
As a result, explorers are scouring ever-more remote corners of the globe in their hunt for hydrocarbons. That quest has unlocked petroleum reserves offshore from Africa and Brazil, and opened up promising exploration regions in the South China Sea, offshore India, or around the coast of Australia. But those sites will remain largely off limits until the new drill ships arrive.
5 years from now, we'll be reading stories about the worldwide glut of oil. History does indeed repeat itself - especially in the commodity business. High prices are followed by increased production which leads to glut and lower prices. That's what happened the last time we had this problem and it will happen again:
The last such boom in orders came in the late 1970s and early 1980s, when exploration rose after the 1970s oil shocks. In the 1990s, low oil prices and overflowing oil supplies meant that oil companies drastically cut back on exploration.
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