The Bush administration didn’t waste much time after its lifting of the executive ban on off-shore drilling to make its second big gesture towards the oil markets.  Late yesterday, the Bureau of Land Management opened 3.9 million acres of land in Alaska for drilling and exploration.  The land had already been reserved for petroleum production, but had been kept in limbo by complaints and legal action by environmentalists:

The US federal government on Wednesday said it would open 3.9m acres of land in a designated petroleum reserve in Alaska for drilling as a means to help curb rising petrol prices. …

But the Bureau of Land Management, an agency within the US Department of the Interior, said the Alaskan land that will now be offered requires no other approvals and will be up for leasing in the autumn.

The site was set aside decades ago but development was blocked by lawsuits from environmentalists concerned about disrupting wildlife. The government has tackled these fears, making it a condition of the lease by oil and gas companies that polar bears, waterfowl and caribou are protected.

According to the New York Times, the field could contain as much as 3.7 billion barrels of oil.  It could start producing oil by 2010, far shorter than the seven years that opponents of drilling claim for both off-shore and interior use.  The added production will also help shore up the Alaskan pipeline, which has to have a minimum level of oil flowing in order to keep it from freezing in the winter.

Oil prices have tumbled the last two days since Bush lifted the executive order.  The price on a barrel of oil fell more than $10, the largest such reduction in almost 20 years.   Analysts in the media claim that the prices have fallen due to “demand destruction” and the fears of a long economic slowdown in the US, in which less energy will get expended.  However, that doesn’t take into account the rising demand from China and India, which is expected to grow — and so a lack of American demand doesn’t make a lot of sense as the reason for the sharp drop.  The markets may have begun to factor in more American production — and more moves to open resources in the US could add to the momentum.

The Bush administration is on the right track.  Congress needs to follow suit — immediately.