President Bush lifted an executive ban on offshore drilling in the United States. (A ban, btw, that his father put into place.) The move, however, was mostly symbolic. Congress also has a ban on offshore drilling, and in order for the ban to be completely lifted, lawmakers have to get on board. Democrats, and even some Republicans (especially those from coastal states) don't seem too keen on the idea.

The news hasn't done much in terms of affecting stock prices for Big Oil companies (Exxon - XOM - is down; Chevron - CVX - is up), nor has it done much in terms of affecting crude oil prices. Indeed, even if Congress decides to move in lock step with President Bush, a big impact probably still won't be seen.

Offshore drilling wouldn't really change much in the energy landscape. Most economic and energy experts agree that lifting the ban would do little to impact current gas prices. Maybe nothing at all. Oil exploration and production takes time, so immediate results are not expected. Even the White House concedes that offshore drilling would do next to nothing in terms of immediately easing gas prices, though their rhetoric is that it might help eventually.

To achieve profitability with deep water drilling, the average threshold for the price of oil is about $70 per barrel. We are below that price currently, but this does not impact the services companies as severly as one might expect. Helix is an oil services company that still gets the majority (67% cited in article) of its revenue from service contracts, many of which were entered into prior to the downturn. These contracts are long-term in nature and generate revenu for several years into the future. Therefore, the volatility in oil prices is not as important to them.

Helix is likely to evience a significant drop in new contracts, but will continue to receive payments on existing contracts. That said, the stock has lost 83% in the almost six months since September 2008, which may be contrued as a great discount.

The claim that the oil companies are sitting on leases and not drilling defies all logic. With oil at $135 per barrel and drilling rigs renting at $300,000 per day, there are no idle rigs anywhere.

The claim that any oil we drill for now will not come on line for five years or longer – and will thus have no effect on prices today – is incorrect. Unlike past oil crises, where the spot price of oil rose more than forward prices, the oil price for delivery in 2012 is trading at $138 per barrel. The market is sending a clear price signal that our problem is in the future – because we do not have the will to curb demand or increase supply.

The oil market, however, has more than anticipation; it has a well-defined forward price signal. This is a key component of the added $25-$40 per barrel in current oil prices. Congressional hearings and "make it go away" legislation will not stop that. Demonstrate the national will to address the supply and demand issues now and it will.