If oil prices raise above a certain value due to inreased scarcity, then companies will becomes interested in it exploring it without subsidies.
True, but it would be in the country's best interest to be proactive than reactive and wait for the market, especially in the terms of national (economic) security.
Very true. That's the biggest flaw with a completely laissez-faire economy.
Yeah. Personally, I think it is impossible for there to be a true laissez-fair economy, no matter how hard to government tries . . . that is, without collapsing in upon itself. The government will have to be the customer at some point, especially as it grows, requiring the investment and purchasing of services from companies.
Unfortunately the proactive approach can backfire just as the reactive can - you might end up spending the money in the wrong places resulting in it going to waste, or the companies being subsidized might not spend the money on extraction research as you want them to. It might be better if the government spent the money on researching oil extraction and refinement itself and exchanging the new technology to the companies in exchange for lower prices for government purchases of oil rather than a direct subsidy. Still, even that might be bad as it could discourage companies from doing research of their own.
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