We are all familiar with pundits from all corners decrying our dependence on foreign oil. Before the oil embargo in the 70’s and subsequent attempts to wean ourselves from OPEC, we were importing about 25% of our oil and now we are importing over 50%. This is always accompanied by gloomy organ music playing in a minor key in the background. We are supposed to believe that we are selling our souls to the devil by relying so heavily on imported oil. Some believe that unless we trade in our SUV’s and find alternative energy sources now, we are destined for blackmail and destruction by our dubious friends in the Middle East. Even Bill O’Riley has fallen for the ruse, and has called for patriotic citizens to sacrifice their luxury SUV’s.
We are importing a large percent of our oil because the Arabs are willing to sell it to us cheaper than we can get it out of the ground here. We also export massive amounts of oil ourselves that we trade with Japan for “environmentally friendlier” oil and our known reserves are quite substantial, but why should we go after it when we can buy it so cheap? In real dollars, oil is as cheap as it has ever been. When it comes to the oil market, the Saudi’s are much more dependant on us then we are on them. If they quit selling the rest of us oil, their only source of income would dry up. They would eventually be reduced to eating sand and washing it down with crude. The poor folks have nothing else but oil and are totally dependant on it for income so they can buy things like food, medicine, cars and computers from the rest of us. The argument that our oil money is enabling those who may someday turn against us to arm themselves also falls flat. We have had various levels of trade embargos with Iraq for more than a decade, the affect of which is questionable. It’s simple economics…they make oil cheaper than we do so we buy it and it frees our resources up for making all the other things we all need.
The real reason we need to open ANWR and re-issue all the offshore oil leases which were revoked by the last administration is to keep the Arabs from getting greedy. We may never have to do more than sink a couple of exploratory holes to confirm the size of the available reserves. The Saudis and Co. would end up tripping all over each other to reduce the price of crude and discourage us from drilling. We would be stupid not to continue buying it from them.
OPEC overplayed its hand in the 70’s when it tried to mess with the laws of economics. Our boneheaded energy policies during the Nixon and Carter administrations abetted OPEC for a while, but after our economy tanked and our oil usage declined, the oil industry was left with a devastating glut that almost destroyed them. In Texas, boom towns turned into ghost towns and oil wells were capped left and right. OPEC knows that this oil is there and they only have to push our buttons a little for us to resume tapping our own resources. But as long as they keep the price of oil cheap, we should be happy to buy all we can from them. Why should we hamstring our economy for the remote possibility of OPEC making a suicidal decision to destroy its best customer? As we struggled with the resulting higher energy costs and depressed economy, our foreign competitors would reap the advantages of lowered energy costs.
If we had a sound energy policy that encouraged research and discovery and guaranteed leases that were not revocable on a whim by any corrupt administration, we would further reduce the price of oil and most likely increase the percent we import. Conservation should also be encouraged provided the economy isn’t forced to suffer in the process. Through research and refinement, cars are becoming ever more energy efficient without sacrificing performance or safety. Another way we can substantially reduce our oil consumption, thereby reducing the price of oil, is to build more nuclear and coal burning power plants. With current technology, both can be done in a safe and clean method.
Reduced energy costs would have the same desirable affect as a tax cut by reducing our costs of doing business and making us more competitive in the world market. More of us could afford to drive luxury SUVs, which are big and expensive and profitable to manufacture therefore employing more of us building them. All other segments of manufacture that are energy reliant would similarly benefit. The economy would rebound with a vengeance. Oh, the greenies would whine in four part harmony and the Naderites would predict doom and gloom. Even Bill O’Riley may be filled with trepidation for a while. In the meantime, maybe he can try to explain how you retract an economy into prosperity.