To shale and back, redux

THE price of oil, which was extremely low during the worst of the pandemic - it actually went below $0 for a brief, weird period - has spiked as a result of Russia's invasion of Ukraine.

This price spike is adding to already high inflation, and it is inhibiting the Western response to Vladimir Putin's aggression; governments are reluctant to tighten sanctions against Russian energy exports, lest rising prices anger their voters.

But shouldn't we expect the market to help reduce this problem? Don't higher prices provide an incentive to increase oil production outside Russia? Yes, they do, and there are in fact signs of at least some supply response to high prices.