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Energy independence – just another form of protectionism? Over at the Cato Institute blog, contributor Daniel Griswold argues that the US, the world’s biggest user of energy, is not quite as dependent on energy from only a few nations as one might think. I agree. Energy “independence” sounds like a smart strategy if you fear that a handful of nations, run by thugs, have a heavy armlock on energy supplies. Fortunately, Mr Griswold argues, it is a bit more varied than that.
Of course, part of what bugs me about the constant demand for energy independence is the concern that this might be a form of protectionism in drag, much akin to calls by western farmers for “food independence”, often just a thin excuse for tariffs on imports.
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Surely it would only qualify as protectionism if the US took up policies actively hostile to foreign energy imports (ie. tariffs)? If US policy is simply to encourage domestic supplies, that seems fair enough. Or is there actually strong support for putting tariffs into place?
At any rate, I must admit that Mr Griswold’s article and his figures were contrary to my perceptions:
Not that I’d ever really thought about it enough. Then again, a third does sound like quite a lot, though the US is hardly unique in this regard. All the same, it’s something worth knowing (if only to spring on others).
The UK has gone further down this road, with only 2% of its crude oil imports coming from the ME.
This came about (unsuprisingly) after the oil shocks in the 70s.
Perhaps the EU should start consolidating its statistics. BP’s Annual Statistical Review shows the EU is already by far the world’s largest fossil fuel importer — importing almost as much oil as the US, and a lot more gas & coal.
In fact, 5 out of the 6 largest energy consuming nations on the planet are dependent on imports — China, India & Japan as well as the EU & the US. The only large energy consuming nation which is self-sufficient? That would be Russia, of course. Maybe a little protectionism is sometimes the lesser evil.
How does me preferring to give the money I spend on oil to someone other than Saudi, Iranian, Russian, and Venezuelan governments figure into this? Am I protectionist, bigoted, or prudent?
Exactly.
There is nothing free market about handing over money to nationalized oil industries of governments who hate the West.
Even “our friends the Saudis” subsidze Wahabbi groups all over the world – which is no surprise as the House of Saud came to power as the representatives of the Wahabbi.
On the other hand getting rid of the regulations on nuclear power (regulations which do NOT improve safety) is free market.
As is reducing the Capital Gains Tax and the Corporation Tax – to help investment in new technologies.
And, yes, so is getting rid of the restrictions so companies can “drill baby, drill”,
Cato sees the “we are sending 700 billion Dollars to countries that do not like us very much” and misreads it as “we are sending 700 billion Dollars to independent private companies that happen to have their H.Q.s overseas”.
It like the Cato “stand up for freedom to invest” campaign – which turned out to be support for various governments to nationalize American enterprises (such as the ports).
Government ownership is not private enterprise.
Exactly.
There is nothing free market about handing over money to nationalized oil industries of governments who hate the West.
Even “our friends the Saudis” subsidze Wahabbi groups all over the world – which is no surprise as the House of Saud came to power as the representatives of the Wahabbi.
On the other hand getting rid of the regulations on nuclear power (regulations which do NOT improve safety) is free market.
As is reducing the Capital Gains Tax and the Corporation Tax – to help investment in new technologies.
And, yes, so is getting rid of the restrictions so companies can “drill baby, drill”,
Cato sees the “we are sending 700 billion Dollars to countries that do not like us very much” and misreads it as “we are sending 700 billion Dollars to independent private companies that happen to have their H.Q.s overseas”.
It like the Cato “stand up for freedom to invest” campaign – which turned out to be support for various governments to nationalize American enterprises (such as the ports).
Government ownership is not private enterprise.
The issue is the cost of energy, and who that money is being given to. This is misread as energy dependence.
As lonk as there is a diversity of supplies, who really cares whether the US, or anyone else, is energy independent or not?
what needs to be dealt with is the price of oil, which has hit present levels as a result of politics, not economics or commerce. The US, in off shore, ANWR, and currently known onshore reserves has nearly half the reserves Saudi does, but most of this stuff is off limits. Current legally exploitable reserves amount to only 30 billion of the total 130 billion available.
Add in the largest known oil shale reserves in the world, and, given that BP claims this stuff to be profitable if prices are $40 per barrel, the US has commercially exploitable reserves seven times larger than those of Saudi Arabia.
As a side issue, Both Canada and Venezuela each have oil sands containing the equivalent of all the worlds conventional reserves combined.
The world is swimming in the stuff, and the only thing preventing a price collapse is Congress, and their loopy laws.
Allow offshore/ANWR drilling, open the oil shale fields, drop the price to $70 per barrel, the US becomes a major oil exporter, reaps a financial bonanza, stuffs Russia, Venezuela, Saudi and Iran, and makes China a chum.
And that is a win/win scenario for the entire world. Including Europe.
We could start all this tomorrow, cutting prices just by announcing that drilling will commence.
Oil consumption by the US is approx 20,000,000 bbl/day. Average consumption per state would be 400,000 bbl/day or about what Greece consumes per day. So when arguing oil consumption let us do apples to apples comparisons. Either US vs EU or US states vs EU countries.
http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
It’s not protectionism, or not necessarily, although protectionists will deploy any argument they can of course to support their case.
The thing is, there is such a thing as politics. There are nation states- collective enterprises, truth be told- with differing ambitions and needs. When those ambitions differ enough, we have wars. And so on. Libertarians can’t simply ignore that facet of human existence. It’s much like immigration policy. Unfettered immigration is a nice idea, but not practical in the real world, because the nations of the world differ so much.
So anyway, if somebody says “we should maintain the coal industry to protect miners’ jobs”, that is (economic) protectionism. If they say “we should maintain the coal industry so that if things go tits up internationally we’ll have fuel for our power stations”, that’s not (economic) protectionism, it’s trying to prepare for future eventualities.
It is a matter of practicalities. Observing the unwisdom of dependence on the goodwill of people who don’t like you very much is entirely reasonable. Imagine if Britain had been utterly dependent on fuel supplies from Germany in 1939.
The autarky fallacy is also favoured by the greenish, who see it as a reason to reduce consumption in general and population too. The basic idea of trade has never really got through to many of them. Greens and farmers frequently use precisely the same language to argue for implicitly opposite policies.
What’s missing from all this is the fact tha oil is fungible. It doesn’t matter what country a particular barrel came from (as if anyone tracked that anyway), because it’s identical to the one next to it. What matters is aggregate imports by the US, and I think everyone agrees that they are higher than is healthy.
Countingcats has it right.
This “oil independence” meme is sentimental bullshit. A nonsensical rhetoric device, usually for promoting bad ideas such as ethanol, tariffs and agriculture subsidies.
Still, “drill, drill, drill!” is the most sensible and free market policy, regerdless of “oil independence”. Why should a government prevent people from enjoying and using the resources available ?
Heard when offshore drilling would come ‘on-line’ and how much it would contribute ? I seem to remember 3% in 2023 and freely admit that’s off the top of my head.
California and Alaska both know something about oil spills ( have we forgotten Exxon Valdiz already ? ).
It’s posturing to distract from the rape of Iraq, Chad, Nigeria, Afghanistan ( pipeline route ), nonsense in Georgia, Somalia…Iran to come. More countries have murder going on than enough.
As far as ‘green’ alternatives…this isn’t one. From an occasional contributor to The Oil Drum, in fact. Have a look at ideas for an energy strategy
http://ergosphere.blogspot.com/2006/11/sustainability-energy-independence-and.html
opit
I take it that as you against the “rape” of other nations you are in favour of allowing domestic oil production to be increased.
After all in oil shale alone (let alone the much less difficult to get ordinary oil reserves) the United States has many times more oil than Saudi Arabia does.
But then someone who thinks the Afghan war is about a pipeline route is unlikely to be rational.
No doubt Bush was behind 9/11.
Or it was “chickens comming home to roost” as that poet lady the American government honours, says.
opit
I take it that as you against the “rape” of other nations you are in favour of allowing domestic oil production to be increased.
After all in oil shale alone (let alone the much less difficult to get ordinary oil reserves) the United States has many times more oil than Saudi Arabia does.
But then someone who thinks the Afghan war is about a pipeline route is unlikely to be rational.
No doubt Bush was behind 9/11.
Or it was “chickens comming home to roost” as that poet lady the American government honours, says.
Opit, the Exxon Valdez was a tanker, a ship. There has never been an oil spill of any significance from an offshore drilling rig, and all those rigs in the Gulf of Mexico have been through some pretty severe hurricanes. Irrational fear of oil spills is no reason not to utilize our own natural resources. But from the tone of your post I don’t expect you to understand that.
Isn’t Obama’s talk about ‘energy independance’ is also about leadership? My understanding is that the US is catching up in terms of nuclear energy with old leaders such as France.