Scarcity is the Goal

Was listening the other day to a discussion about high oil/gas prices and causes thereof, when a very smart leftist academic brought up the notion of "production of scarcity" -- that the industry has actually been shutting down oil wells in hopes of keeping supply low and therefore prices high.

I'm sure I'm naive about this, but is this common throughout the economy? While legislators throughout the world are busy coddling capitalists and throwing money at them in hopes that they will thereby produce more, are they on a certain level trying instead to limit production? That is sure what it seems to me.

Good ol' Haliburton for years has been shutting down holes in the Kettleman Hills of California (and probably elsewhere) so the oil companies (Standard and BP) can drill next to them. It seems as if there is a different price the U.S. government will pay for new oil wells vs the old oil wells. You can charge for exploration with new wells regardless of whether or not you get something.

What do all of you think?