Freedom From Foreign Oil: Part One
April 26th 2009 13:37
Virtually every politician is pounding their fists and calling for freedom from foreign oil, also known as “energy independence.” They claim that our addiction to oil helps to support (embolden, anyone?) both terrorists and regimes such as those in the Middle East and Venezuela. As well, U.S. citizens are having their wallets emptied out at the pump. Unfortunately, they employ high standards of reducing this dependence but are unable to show what these goals would achieve.
Looking at the claim of empowering the “bad guys,” there is not much evidence to be found. First off, the U.S. imports more oil from Canada and Mexico than it does any other country. Second, terrorism has and will occur no matter what the price of oil. It was down near $20 per barrel in the ‘90s, but terrorism was alive and well. Finally, even if the U.S. shifted its purchases of oil even more from the Middle East to other countries, this would not change the price of oil. The oil market is global and will be the same price no matter where the supply and demand come from.
As for Americans paying absurd prices at the pumps, we buy oil from abroad because it is cheaper than producing it ourselves. Hence, if oil imports were forced to be reduced (or were cut off entirely), then the price of gas would increase, not decrease. As well, oil still remains cheaper than any alternative fuel. So if politicians are looking to make gas cheaper, then eliminate gas taxes, allow for less-environmentally friendly types of gasoline to be used, and start drilling.
Politicians seem to ignore that oil is bought and sold in a global market. If America did get to the point where we exported more oil than we imported (the definition of energy independence), it would not affect the influence of supply disruptions abroad. If OPEC cuts production and prices increase, prices will increase for both net importers and net exporters of oil. It remains to be shown what problems energy independence would actually fix.
Looking at the claim of empowering the “bad guys,” there is not much evidence to be found. First off, the U.S. imports more oil from Canada and Mexico than it does any other country. Second, terrorism has and will occur no matter what the price of oil. It was down near $20 per barrel in the ‘90s, but terrorism was alive and well. Finally, even if the U.S. shifted its purchases of oil even more from the Middle East to other countries, this would not change the price of oil. The oil market is global and will be the same price no matter where the supply and demand come from.
As for Americans paying absurd prices at the pumps, we buy oil from abroad because it is cheaper than producing it ourselves. Hence, if oil imports were forced to be reduced (or were cut off entirely), then the price of gas would increase, not decrease. As well, oil still remains cheaper than any alternative fuel. So if politicians are looking to make gas cheaper, then eliminate gas taxes, allow for less-environmentally friendly types of gasoline to be used, and start drilling.
Politicians seem to ignore that oil is bought and sold in a global market. If America did get to the point where we exported more oil than we imported (the definition of energy independence), it would not affect the influence of supply disruptions abroad. If OPEC cuts production and prices increase, prices will increase for both net importers and net exporters of oil. It remains to be shown what problems energy independence would actually fix.
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