Thirty-four years have come and gone since Energy secretary James Schlesinger described the American approach to oil supply problems.

We have only two modes—complacency and panic

Nothing has changed. As popular revolt spread from Egypt into Libya, panic smoothly replaced complacency in the markets and the overwrought minds of the American people. Apparently, since Egypt blew up first, and Libya, which is west of Egypt, blew up next, it has been deemed logical to conclude that Algeria, which is west of Libya, will be the next domino to fall. The Telegraph's Ambrose Evans-Pritchard did not want to be left out of the fear fest, as his Oil could hit $220 a barrel on Libya and Algeria fears, warns Nomura attests.

Nomura's commodity team said oil prices risk vaulting to uncharted highs over coming weeks if chaos hits Algeria as well, reducing global spare capacity to the wafer-thin margins seen just before the first Gulf War...

"We could see $220 a barrel should both Libya and Algeria halt oil production. We could be underestimating this as speculative activiites were largely not present in 1990-1991," said Michael Lo, the bank's oil strategist...

Nomura said a shut-down in both Libya and Algeria would cut global supply by 2.9m b/d and reduce OPEC spare capacity to 2.1m b/d, comparable with levels at the onset of the Gulf War and worse than during the 2008 spike, when prices hit $147...

Nomura's report, which does not examine the catastrophic scenario of a full-blown Gulf crisis, said past oil shocks have shown a three-stage pattern, with a final blow-off in prices in the final phase. The current crisis is at stage one.

From Forbes' Don’t Fret Lost Libyan Oil But Worry Plenty About Algeria

After years of complacency about the oil supply, fear now makes it possible to imagine all sorts of scenarios, no matter how improbable, that will bring down the world economy. Perhaps it might have been better to worry about this stuff a bit earlier. The year 1977 comes to mind, when Jimmy Carter was president and Schlesinger served in his cabinet.

Here in America, with oil hovering around $105 a barrel, panic has led to the usual absurdities. Just as in 2008, Lisa Murkowski wants us to drill in the Arctic National Wildlife Reserve (ANWR). Once again, pandering politicians want to tap the Strategic Petroleum Reserve (SPR). Yahoo reprinted this news release from Reuters.

WASHINGTON (Reuters) – White House Chief of Staff William Daley said on Sunday the Obama administration was considering tapping into the U.S. strategic oil reserve as a way to help ease soaring oil prices.

Speaking on NBC television's "Meet the Press," Daley said: "We are looking at the options. The issue of the reserves is one we are considering. It is something that only is done -- and has been done -- in very rare occasions. There's a bunch of factors that have to be looked at. And it is just not the price."

"All matters have to be on the table when you see the difficulty coming out of this economic crisis we're in and the fragility," Daley added.

Congress has pressured the Obama administration to look to the emergency oil supply to ease consumers' fears over rising gasoline prices, which are threatening again to top $4 per gallon at U.S. gas stations...

This Yahoo story was open to comment by the General Public, and at last count 4,862 comments had been made. On Sunday, knowing that our domestic oil supply is always a subject of great interest when the oil price skyrockets, I posted Where Is U.S. Oil Production Going? Although I could not cover the entire subject in a blog post, I did provide enough information to give my readers a good idea of what to expect over the next 5 or 10 years (in the Gulf of Mexico, in the Bakken Shale, etc.). My post received two comments—the first one from Unbound pointed to the Yahoo story, and noted the following:

What is of interest, at least for me, was the reader comments at the end of the [Yahoo] article — IMO these reader responses are representative, or better yet, a commentary on the pervasive lack of understanding of the energy/oil situation.

Saying those comments on Yahoo showed "a pervasive lack of understanding" of the oil situation is putting it mildly. Most of the comments I looked at were incoherent, or full of political vitriol, but "Drill, Baby, Drill" was a common theme. These comments were sometimes accompanied by the claim that the U.S. has more oil than Saudi Arabia, which is a reference to the oil shale of Colorado and Utah.

Possible impact of increased access to oil resources in the Lower 48
Federal Outer Continental Shelf (OCS, excludes Alaska). Source: EIA

I can assure you that if we were to open up every square foot of the United States (and its continental shelf) to drilling, we might see some new oil in 2019-20. How much? I don't know precisely, but not enough to save us (graph above). See my ANWR Is Not The Answer and As Good As It Gets. I wrote these stories in 2008. Few listened to me then, and few listen to me now. You can lead a horse to water, but you can't make it drink think. Of course, you must first get the horse's attention.

The ignorance on display in the Yahoo comments is breathtaking. As the oil price rises, and the panic spreads, the confused shouting of America's bewildered and fearful multitudes drowns out any rational discussion of where we stand. James Schlesinger (left) gave us another memorable quote recently which bears repeating here:

The battle is over, the peakists have won.