Just so we all can see the numbers together, OPEC called for a 520,000 barrel a day cut in production from their members to stabilize the price per barrel at $100. OPEC believes they are producing too much.
Remember that if we open up the off shore drilling and drill in Alaska's ANWR we can increase our domestic supply by 300,000 barrels a day, just a little over half what OPEC cut this time. And those cuts are easy for them to make.
So, first, why $100 a barrel when ten years ago OPEC was concerned about stabilizing the price per barrel at $25? The prices are actually the same, on the world economy. That how far the current administration let the value of the dollar fall (fortunately they've made moves to shore up the value and our economic woes are starting to affect other economies which are also declining, which makes the dollar stronger on comparison). The value of the dollar has dropped to 50% of what it was worth in the summer of 2007. So OPEC is pegging their target to the price of oil in relation to other currencies.
Next, I wouldn't worry too much about an OPEC cut. As it is there is too much oil on the world market. Supply exceeds demand (the exact opposite you hear from Washington). But OPEC member nations know they can sell all the oil they can pump. They'll reduce production in the short term, to comply with their agreements. Then in a few weeks they'll go back to full production and sell the extra on the spot market, just like they've always done.
As for drilling here, there are some new developments. You might have heard about the scandal in the Interior Department's MME Denver's office, the office that handles the leases and payments to the government from oil companies. If it got lost in the 9-11 hoopla, you might want to go read that and get familiar with it. Note that the whistle was blown by another MME employee, not the industry. The oil industry is slobbering at the prospect of having new leases. One, because they under pay what they need to for the right to pump oil, and two, because they want even greater heights in stock prices (see reasons and discussion about oil companies not drilling on land they already have leases on, even when there's a good amount of oil available).
There is now a (possibly) viable process to extract oil from shale. However, it involves a large amount of water and energy to convert that water to steam. There's not much water available in the places where the shale oil is at. The water would come from underground aquifers that replenish at rates measured in centuries, and much of those have already been promised to farmers (which have depleted the resource at an alarming rate already). Then there is the energy needed to extract the oil. Remember, energy in must be less than the energy from the oil extracted for it to be really viable. Oil industry execs say they could bring in the oil for around $25-35, but that's based on getting the water and energy for practically nothing. And, all oil is sold on the world market, which means it still will be sold for around $100 a barrel (if it was available now. I'm still trying to find more information about this (my guess is that it really is just a PR stunt aimed at positioning claims for when we might have an actual process, and this is the same process that has been shown not be be economically viable).
Shale oil, though, is a game changer. Setting aside the environmental concerns, if we could extract oil from shale cheaply and on a large scale, that does have the opportunity to wean the US from foreign oil imports (not completely, but it'll put a big dent in them).
So, OPEC does a temporary cut that is almost double our potential output increase if we open up everything and a possible new process (that sounds like an old discredited process) to extract shale oil. I think the oil business has officially entered the spin cycle.