David R. Henderson  

Energy Independence

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Unfortunately, or fortunately, depending on how you look at it, presidential campaign years give us economists a lot of "teaching moments," that is, chances to educate the public about basic, important economic truths. This campaign year is no different. I say "unfortunately" because we get a cold dose of reality, an awareness that, whatever the candidates do or don't understand, they think they have running room to make nonsensical statements. And they think correctly. Very few people in the public and very few people in the media know that their statements are nonsense. Parenthetically, because this is not what I want chance to focus on in today's blog, that was what was so refreshing about "Joe the Plumber." He saw a vulnerability in Barack Obama's thinking and, sure enough, got Obama to reveal his collectivist view of wealth. I'll lay out my thoughts on that in a later blog if other issues are not more pressing.

The fortunate part is that people's interest in issues is heightened during presidential campaigns. Invariably, I see this in my classes. When the campaigns are on, I get more questions from students about the campaign issues, a high percent of which don't seem to be "gotcha" questions directed at either of the main candidates, but, rather, seem to be based on genuine curiosity.

One issue that has arisen in this campaign is the issue of "energy independence." Both McCain and Obama believe that moving towards energy independence is a good idea. But, as I pointed out in this month's The Freeman, it's not. Energy independence is no more desirable than coffee independence, banana independence, or car independence. The case for free trade does not break down just because the good being exchanged is important, as oil is. It doesn't generally make sense, if your goal is the wellbeing of country A's citizens, for country A's government to impose tariffs or import quotas on a product from other countries. Even if we put the moral arguments against coercion aside, and even if we nationalistically care only about Americans (I don't care only about Americans), the gains to the domestic producers from reducing trade are less than the losses to domestic consumers. I won't repeat that argument here because you can go to The Freeman to read it.

Many people think oil is different in one other fundamental way: they think we are vulnerable because countries that send us oil might cut us off. Sure enough, when I laid this out in class last week during a discussion of trade barriers, one of my students quoted Senator McCain's statement that in buying as much oil from abroad as we do, "we are sending $700 billion a year to people who hate us." (Actually, McCain's usual version is "don't like us very much." I believe, although I couldn't find it on the web, that I've heard McCain use the word "hate.") I answered that I don't think Canadians hate us that much. (It comes as a surprise to most people that we import more oil from Canada than from any other country. Mexico and Saudi Arabia vie for second.) I also think that many of these foreigners hate our government more than they hate us. Most of the polling data of other countries' citizens' views of America are not about their views of Americans but of their views of the U.S. government. This is a distinction, by the way, that Americans seem to have trouble making. But I also pointed out that even if we take McCain's statement as true, notice what McCain is saying: Even countries that hate us want to sell us oil. To paraphrase Adam Smith, it is not from the benevolence of the Saudi Arabian or Venezuelan producers that we fill our gas tanks, but from their regard for their own self-interest. Indeed, this statement of McCain goes further than Adam Smith. In Adam Smith's world, the butcher, baker, or brewer might have been indifferent to you or only mildly liked you. But McCain's statement illustrates Gary Becker's point that free markets break down discrimination: you might hate that guy who wants your product, but you love yourself and your family, and so you sell it to him.


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The author at Remains of the Day in a related article titled What's so bad about energy dependence? writes:
    David Henderson punches economic holes in both McCain and Obama's calls for energy independence. Energy “dependence” is much cheaper. In fact, the case for being “dependent” on other countries for oil is the same as the case for being dependent... [Tracked on October 27, 2008 3:45 AM]
COMMENTS (30 to date)
R. Pointer writes:

A couple of points:
1). The economics are correct. A commodity like oil is fungible, and therefore as long as we use oil as our main source of energy then it will not matter if we buy directly or indirectly from Arab states.

2). But if the world stopped using oil all together, then those places would not have any income to spend on efforts undesirable to civilized peoples. I don't think the fear has anything to do with their cutting us off, but rather using those profits to do radical activities. It is not the state apparatuses that are the problem, it is the rich aristocrats with power issues that are.

3). If oil became a secondary energy resource (probably a long term pipe-dream), then the profits made by those owning those resources would fall. That would be especially true if another energy resource made oil prohibitively expensive to extract. Therefore, we could worry less about countries that generate hateful ideologies and use their natural resource profits to export them.

4). Getting to energy independence by drilling is pretty dumb, because the benefits are diffuse (all world customers benefit) and the costs are concentrated (we pay for drilling, and of course these costs are debatable). A new cheaper-than-oil source is the only answer.

While the politicians might not articulate these idea, they are limited by the public rhetoric they must use to get their point across and their need to pander. But instead of attacking their ideas from just an economic perspective, I think it is vital to understand the geopolitical power issues they must balance. Just think of this analogy; when drug addicts buy from corner drug dealers, and then those drug dealers conduct a gang war where people get killed, innocent or not, would you say keep buying dope from the corner boys? There is clearly an externality to some market trade, especially if the people you are trading with have bad manners.

David Shor writes:

I think you are being a bit simplistic, there are indeed fairly reasoned arguments for "energy independence". Namely, that there are externalities involved with importing oil. To list some of them:

1) Traditional pollution. This includes smog, CO2, and other pollutants associated with burning fossil fuels. Obviously though, domestic oil is no different from foreign oil in this respect. Still, there would be room for government to limit oil usage.

2) National Security Externalities. If oil money benefits countries that "don't like us", they might proceed to use this money to fund terrorism or military spending.

Because of the current structure of our foreign policy, this would force us to ratchet up military and national security spending to counteract this foreign increase.

And if that is the case, then there is a clear externality. The woman sticking Saudi oil in her SUV enjoys the cheap gas, yet the remainder of the country must pay to counter the terrorism that the woman has funded.

3) Baby Industry Arguments: Comparative advantage does not come out of thin air. Massive government investment can lay the seeds for wildly successful industries later on.

And by investing in Alternative Energy, we could establish a foothold in the sector, much like military spending insured our foothold in the technology sector.

JSBolton writes:

A left that uses economic panic-mongering to get power should lose massively. They don't seem to care about the collateral damage, the incredibly huge externalities of their power-greed.

Frejus writes:

"Very few people in the public and very few people in the media know that their statements are nonsense."

Seems like economics as a profession would be much better off if it stops calling its audience stupid or ignorant.

"He saw a vulnerability in Barack Obama's thinking and, sure enough, got Obama to reveal his collectivist view of wealth."

Disagree. Progressive taxation isn't collectivist--that's an extremely loaded term and shows the limits if this current argument--and the fact that economic gains have gone to those at the top in the past 20 years argues strongly for making them add a few extra bucks for all the debt run up by Joe the Plumbers GOP counterparts.

"Energy independence is no more desirable than coffee independence"

No, but given that geophysical models clearly point out that sweet crude production has peaked and overall oil production will not likely increase in the future, heading in a path towards alternate forms of energy--particularly through R&D--makes a lot of sense, similar to the way Govt funding paved the way for the computer chip and internet. Though one must caveat with Jevon's so called paradox.

"Gary Becker's point that free markets break down discrimination: you might hate that guy who wants your product, but you love yourself and your family, and so you sell it to him."

On the face of it, this statement is pointless. One could easily argue that love of family argues for engaging in the slave trade--it's a nice income. In other words, making this argument is fallacious. Free markets don't break down discrimination. Ethical norms do. The free market of slave trading didn't end slavery.


the snob writes:

add another issue: uncertainty about future prices and supplies. oil's primary value is not as a lubricant or raw material for making plastics, but as a convenient means of producing heat and thereby mechanical and thereby electrical energy. low energy prices have a huge multiplier effect through the economy. if we knew with any certainty that a barrel of oil would be available at $50 in 2000 dollars for the next 50 years, then i'd be much more inclined to agree with your ideas. this would hold true even if we didn't import any oil--witness brazil, which is going to be able to export their oil thanks to a robust domestic alternative energy sector.

Frejus writes:

Clarification on statement: "Energy independence is no more desirable than coffee independence"

I meant to agree with this statement. With caveat. It doesn't sound like I agree when saying "no" but I meant "correct, energy independence is no more desirable than..."

Ruy Diaz writes:

I take issue with this:

"Most of the polling data of other countries' citizens' views of America are not about their views of Americans but of their views of the U.S. government."

That's their way of hating Americans while keeping a positive self-image: "Oh, I don't really hate you, I hate what your representatives do on your behalf." Think about this way: when a calamity falls on America, do they feel that warm feeling of schadenfreude? Do they dance in the streets when towers fall; do they smile in their living rooms when news of American soldiers' deaths reach them? That's what matters. Weak protestations that they don't hate the American people are but excuses.

mgroves writes:

"This is a distinction, by the way, that Americans seem to have trouble making."

Maybe I'm being idealistic here, but isn't the US Government: "government of the people, by the people, for the people". Therefore, isn't it the same thing to say if you hate the US government, you hate US citizens?

On the same token, isn't the idea of a huge separation of "government" and "citizens" very populistic (I use this term disparagingly) in nature? (I.E. "fight for the middle-class", "good for Wall Street bad for Main Street", "she's a politician who's on OUR side", type of hollow rhetoric)?

El Presidente writes:

Welcome!

I agree with your analysis of the oil-from-enemies argument. It is astonishing to me that we are bombarded with the notion that every time we fill up a gas tank we're handing $20 to ____________ (substitute appropriate boogie-man). We could do far more to improve our relationship with energy by changing the incentives for sprawl embodied in many of our tax codes and land use laws than by all the arab-bashing and Chavez-demonizing we could muster. Our focus should be using less (efficiency) before making more (capacity).

I'm not sure I would agree that Obama's view of wealth is collectivist. I think his concern is more along the lines of balancing the benefits of distribution against the benefits of consolidation. Strong arguments have been made that there are benefits to each, though some here might think there are benefits only to consolidation because they have confused the accumulation of wealth (their own personal goal) with the productive use of capital (the goal of capitalist economies). They are not one and the same. On this point, Smith uses several examples of misguided attempts to enrich one's self which result in neither the benefit of the many nor personal wealth. Smith might say they're in royal company on that notion. I agree that Obama doesn't frame it that way, and I do feel it is deliberate and disappointing. To that end, I would ask you a question: To what extent can a candidate afford to educate a willfully ignorant electorate?

There have been many ridiculous notions uttered in the name of economic progress, and quite often from those who claim to know what makes an economy strong. While I take umbrage at their cliche-peddling that confounds national income with personal income (e.g. "a rising tide raises all boats"), I am also dismayed by the willingness of individual voters to succumb to such notions and the failure of social institutions to point out the flaws in the arguments before we have some sort of crisis.

The best definition I've ever heard of seduction is, "Persuading somebody to do something they want to do but think they're not supposed to." If people generally recognize the existence of constraints, why are they susceptible? What is it they want to do that makes them such pushovers? As for the candidates, what is one to do if they would like to tell the truth and would also like to have the opportunity to make good use of it through the power of elected office?

Dr. T writes:

The only situation that requires energy independence is a world war against opponents who are capable of disrupting shipments of oil. Otherwise, no country needs energy independence.

Rather than spend trillions of dollars trying to achieve energy independence, we should spend hundreds of billions of dollars beefing up our navy so that future enemies cannot control the seas.

El Presidente writes:

mgroves,

Maybe I'm being idealistic here, but isn't the US Government: "government of the people, by the people, for the people". Therefore, isn't it the same thing to say if you hate the US government, you hate US citizens?

It might be if you took it literally. What they generally mean is that they see the activities carried out by the American government as incompatible with the sentiment expressed by the American people. Their quarrel is with policy. Kinda like telling somebody you love that what they just did was really really dumb. I benefited greatly from reading the work of Kenneth Arrow. Even his wiki page on Arrow's Impossibility Theorem will give you a good idea of how this statement, while seemingly nonsensical, makes good sense in experiential context. The aggregated statements of individuals do not often amount to a statement of collective intent. A democratic republic is inherently irrational in that regard. It is rational in moderating the extremes and in forcing debate and selection of policy to occur in institutions that are capable of forming a coherent policy, whether or not they ever do.

RL writes:

If an "energy independence" policy was called a "Let's use up all of our oil first" policy, people might react differently...

TheoB writes:

Oil is different in one other fundamental way: the oil market is not 'free'. It's controlled by a cartel. This fact alters the equation, does it not?

Steve Roth writes:

Mr. Henderson's posts so far are threatening to send me screaming from this blog forever. (Yes Bryan, Arnold, I know that keeps you awake nights. But if I'm just one representative voice...)

I think perhaps one reason that Bryan and Arnold's posts are so often interesting is that they've had the standard-issue twaddle (viz: this current post) swatted out of them by commenters over the years.

So, taking advantage of my own little "teaching moment" here...

> Energy independence is no more desirable than coffee independence, banana independence, or car independence.

True: when they say "energy independence" it's because the phrase sells well to know-nothings. But right-wing economists' attacks on that pandering mostly (viz: this post) just serve as smoke-screens to avoid discussing the real issue--reducing American reliance on fossil fuels.

>The case for free trade does not break down just because the good being exchanged is important, as oil is.

Yawn. Arguing standard-issue comparative advantage (heard it, know it) and ignoring the real issues related to fossil fuels.

>if your goal is the wellbeing of country A's citizens, for country A's government to impose tariffs or import quotas on a product from other countries.

I don't *think* anybody is proposing tarrifs or quotas. It would be nice if they were, because we could respond by quoting Adam Smith. Again, standard-issue stuff that doesn't address the real matter at hand.

>Even if we put the moral arguments against coercion aside

I really wish you would. We've all heard them all before. Governments are, have to be, coercive. The interesting questions are about what, where, who, when, how much.

>The gains to the domestic producers from reducing trade

Right. People want to reduce oil use because they think less trade is good. Sigh. Again, ignore the populist pandering and discuss the real issue: the gains to America (and the world) from reducing our dependence on fossil fuels.

Take on your opponent's best argument, not his worst.

>Many people think oil is different in one other fundamental way:

No: multiple ways. You've set up one of them here as a red herring and straw man.

>They think we are vulnerable because countries that send us oil might cut us off.

While Russia's recent gaming of their near neighbors and of Europe does raise some concerns over what might happen in the longer future, I don't think that's primarily what has people nervous. It's not the argument either candidate is making.

>Sure enough, ... "we are sending $700 billion a year to people who hate us."

Sure enough, one of your students raised a point that's completely unrelated to our being "cut off."

How about this: if we reduce our consumption of fossil fuels, it will serve to lower oil prices, and as a result it will provide less funding for some seriously anti-american regimes. (Yes, less for Canada, too, but they've got lots of other things to sell. Not so Nicaragua.) This is not a crazy idea. And it has nothing to do with standard-issue Adam Smithicism.

Or: if we're less dependent on fossil fuels (and the prices are lower), we have far less incentive or need to engage in America-crushing disasters like the Iraq War. (Not even the most dyed-in-the-wool neocon believes we would be there if there wasn't oil there.) Again, Adam Smith and comparative advantage have very little to do with this. (If all you have is a hammer...)

>I also think that many of these foreigners hate our government more than they hate us.

Prehaps/probably true, but so what? Another red herring. The point remains the same: funding regimes that are not seeking our best interests, via high oil prices caused in part by U.S. demand (25% of world demand).

>Even countries that hate us want to sell us oil.

If the only issue, or even an important issue, is concern about being "cut off," that is a valid point. But...

And we haven't even started on environmental issues and other negative externalities. Long, interesting list of issues there. Have you read Pigou?

I read Bryan and Arnold because they often cut past the chaff (i.e. "energy independence") and go to the very quick of an issue, often with new and sometimes even profound insights. I often think they're profoundly wrong (often because they hew too slavishly to their beliefs in Adam Smith et al. [cf Greenspan's mea culpa yesterday]). But I rarely consider them trite, repetitive, dull, or hackneyed. Here's hoping that the writing, thinking, and discussion here continues on that high level.

Oh, and an aside:

> got Obama to reveal his collectivist view of wealth.

A strong middle class makes for a strong country. Talk about wacko collectivism.

I always have to ask: David, do you oppose progressive taxation in toto? Or are we just discussing degree here?

Unit writes:

It becomes more and more evident from these discussions that people don't worry enough about hubris. Saying that we're dependent on fossil fuels doesn't imply that the government can do anything constructive about it. The current set-up evolved, it was not ordered. Let me make an analogy. Our bodies have evolved to be dependent on water. Should we ask the government to reform our biology so as to reduce our dependence from water?

Off-topic: David, in light of current events, don't you think Moral Hazard should have its very own entry in the Encyclopedia?

Steve Roth writes:

Unit:
>Saying that we're dependent on fossil fuels doesn't imply that the government can do anything constructive about it.

Is this really serious?

Saying that flourocarbons destroy the ozone layer doesn't imply that government can do anything about it.

But...uh...it did.

Saying that there are too many murders doesn't imply that government can do anything about it.

But...uh....

Saying that smallpox (or malaria) were (are) killing millions doesn't imply...

Saying that rural areas lack electricity...

That Barbary pirates were ravaging U.S. trade...

That there's government corruption...

Daniel Reeves writes:
Seems like economics as a profession would be much better off if it stops calling its audience stupid or ignorant.
Seems like the world in general would be much better off if people stopped being ignorant of economics.
Maybe I'm being idealistic here, but isn't the US Government: "government of the people, by the people, for the people". Therefore, isn't it the same thing to say if you hate the US government, you hate US citizens?
No. The people are not that responsible for the atrocities of our government.
Oil is different in one other fundamental way: the oil market is not 'free'. It's controlled by a cartel. This fact alters the equation, does it not?
First of all, that is wrong. Oil in general is not a cartel. Now, Saudi Arabian oil is a cartel because of OPEC... but oil is fungible, i.e. Saudi oil substitutes perfectly for Canadian oil and vice-versa, therefore buyers only care where they can get it cheapest. If Saudi Arabian oil is too expensive, we'll just buy from somewhere else.
How about this: if we reduce our consumption of fossil fuels, it will serve to lower oil prices, and as a result it will provide less funding for some seriously anti-american regimes.
I doubt a slight scaling back of America's foreign oil consumption will do much. It will probably do much more harm than good, both to Middle Easterners who just want to make a living and to Americans who don't want to shell out ridiculous amounts of money. I do believe that if an anti-American regime really wanted to hurt America, they'd find a way to stop us from buying foreign oil.
Unit writes:

Steve Roth,

" Saying that flourocarbons destroy the ozone layer doesn't imply that government can do anything about it.

But...uh...it did."

ok. that may be so, but it doesn't affect my statement.

"Saying that there are too many murders doesn't imply that government can do anything about it.

But...uh...."

uh what? This is debatable but murder rates might be declining as a by-product of increased prosperity.

"Saying that smallpox (or malaria) were (are) killing millions doesn't imply..."

Right. Problem not solved... except maybe by scientific progress.

"Saying that rural areas lack electricity..."

Yes, at what cost exactly? Anything the private sector couldn't have solved?

"That Barbary pirates were ravaging U.S. trade..."

Sure let's go out there and police the world, but at what cost?

"That there's government corruption..."

and? can they do anything about it? You tell me.

Easyliving1 writes:

The world is a complex place for a multitude of reasons yet many words chosen by politicians convey, or aspire to, simple concepts that are meant to do one thing during an election: get votes.

Threatening American dominance in oil production via our superior technology and business acumen is the correct political position. This is phrased "energy independence" yet that is not as much a 10 year goal as it is a direction. If either candidate gets 8 years in office do you think he really cares if a pledge made in the 2008 campaign wasn't fulfilled?

I strongly support drilling in order to create jobs, affect the world market, and help to minimize any damage to the environment.


David Shor writes:

Daniel,

"Seems like the world in general would be much better off if people stopped being ignorant of economics. "

As someone who has studied Economics at a graduate level, I've learned that the original pictures painted by Friedman and Hayek were simplistic and wrong.

Protectionism is occasionally justified, externalities are everywhere, and government intervention is often beneficial.

And a lot of the time, people's "ignorant" concerns, have been codified into more complex theories and vindicated, even if they were stripped away in the simple 19th century era models.


"First of all, that is wrong. Oil in general is not a cartel. Now, Saudi Arabian oil is a cartel because of OPEC... but oil is fungible, i.e. Saudi oil substitutes perfectly for Canadian oil and vice-versa, therefore buyers only care where they can get it cheapest. If Saudi Arabian oil is too expensive, we'll just buy from somewhere else. "

No. If OPEC cuts their production quotas, then the supply of oil goes down, and the price of oil, Saudi or Canadian, goes up.

Econ 101 doesn't apply very well in the case of cartels, which have the power to affect prices by changing production.

In that case, game theory has to be used, it leads to quite different outcomes then perfect markets would suggest.

"I doubt a slight scaling back of America's foreign oil consumption will do much. It will probably do much more harm than good, both to Middle Easterners who just want to make a living and to Americans who don't want to shell out ridiculous amounts of money. I do believe that if an anti-American regime really wanted to hurt America, they'd find a way to stop us from buying foreign oil."

On the contrary, even small increases or decreases in demand have explosive results on oil prices. And this has explosive results on the producing countries.

After all, the collapse of oil prices in the 80's was mostly responsible for the fall of the Soviet Union. ( Read http://www.aei.org/publications/pubID.25991,filter.all/pub_detail.asp )

David Shor writes:

Unit,

"uh what? This is debatable but murder rates might be declining as a by-product of increased prosperity."

Or, government went ahead and hired police officers and modified crime laws, and lowered crime. (Or, if you want something controversial, some economists believe that the legalization of abortion was responsible.)

"Right. Problem not solved... except maybe by scientific progress."

Well, no. It was a massive government effort, involving millions of people and billions of dolllars, paying people with tax dollars in order to search every last soul in the world and inoculate them against small-pox.

"Yes, at what cost exactly? Anything the private sector couldn't have solved?"

Well, if you believe that children should have access to electricity when they grow up, so that they can just as easily study as their peers...

"Sure let's go out there and police the world, but at what cost?"

If pirates are attacking US ships, that's an act of war...

The person's point, is that government action can actually solve a great number of problems.

Bob Murphy writes:

Steve Roth wrote:

Mr. Henderson's posts so far are threatening to send me screaming from this blog forever.

Well, David Henderson's posts so far are threatening to make me get even less work done, because now I have to add EconLog to my daily blog rotation.

Mr. Roth, you're right that David didn't devote his column or blog post to every conceivable argument for "energy independence," but that's because he had to start off with the basics. It's a big issue in the campaign this time around, and I don't remember anyone else tackling it in a while.

Rather than typing out "Yawn" etc., you could just say, "I hope in a future post you could address some of the better arguments for energy independence, such as XYZ..."

You should remember that there are lots of people reading the Freeman or this website who are new to the whole world of free-market thinking. If David jumped in right away at step 13 in the debate, those newcomers would be lost.

Unit writes:

David Shor,

"The person's point, is that government action can actually solve a great number of problems."

But that doesn't address my point that just because government "ought" to do something (like making us "energy independent") it doesn't mean it "can". You don't respond to my thesis with a few counterexamples like the Barbary Pirates etc...

Now for your examples. The government can maybe solve some problems quite visibly, I don't know. But you don't seem to care about the costs for attaining those goals, the unintended consequences (were there any?), the crowding out of civil society, etc...in short, you confidently point to the "visible" government actions, but don't care about "what is unseen".

If you're going to forget about Hayek and Friedman then you're going to have to disregard many more founding fathers of economics, people like Bastiat for instance.

doug writes:

"It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

From that old collectivist, Adam Smith.

Greg writes:

Personally, I don't find the argument about funding non-democratic regimes all that convincing. The biggest problem with international trade in oil, in my opinion, is that the entire economy is highly dependent on it, supply is highly inelastic, and in theory the supply is highly susceptible to disruption. If terrorists bomb one big oil depot in Saudi Arabia, economic havoc ensues. So while any significant degree of reduced dependence on foreign oil is a long-term vision, I think it's one worth pursuing in an incremental way. Environmental arguments are probably a good second-order justification.

Having said that, I agree that the candidates are to some degree playing on anti-trade sentiment and other gibberish and that this is a bad thing.

Ron Bengtson writes:

What too many people do not understand (or have forgotten) is that "energy independence" is a patriotic slogan inspired by the Arab oil embargos that occurred in the 70's.
Please review an in-depth presentation at: http://www.AmericanEnergyIndependence.com

We may be entering into a time where free market economics are inadequate to compete with a powerful global monopoly organization like OPEC.
Also, consider the possibility that we may aready be engaged in a form of "economic warfare" conceptually similar to a biological warfare that has been designed to weaken and subdue, but not destroy an adversary – Where the motive is not short-term gain, but a long-term goal of ideological domination.

Craig writes:

The government is restricting our right to trade with each other (oddly enough) through its restrictions on domestic exploration and drilling. I'm a firm believer in free trade, but artificial impediments to domestic trade aren't the best way to promote the other.

Since oil is a commodity and its price is roughly similar world-wide, leave it up to American producers to decide if its worth drilling for it here. At that point, the economic discussion can rightly begin.

Daniel Reeves writes:
As someone who has studied Economics at a graduate level, I've learned that the original pictures painted by Friedman and Hayek were simplistic and wrong.
Are you trying to imply that I'm a follower of Friedman/Hayek? You'd be wrong to. More importantly, how is this a rebuttal to anything I have said in what you quoted up to this point?
Protectionism is occasionally justified,
Really? Seems like you disagree with about 85% of the higher-up profession. And, again, how is this a rebuttal to anything? Are you just using this space to start a tangential diatribe?
externalities are everywhere, and government intervention is often beneficial.
I agree, and sometimes it is. But I still don't understand your point.
On the contrary, even small increases or decreases in demand have explosive results on oil prices. And this has explosive results on the producing countries.
Sorry, but I agree with you. Blame my awkward phrasing for the confusion. What I meant to say is that I doubt it'll do much good. I dropped a hint when I said "It will probably do much more harm than good [...] to Americans who don't want to shell out ridiculous amounts of money," which was supposed to emphasize that the costs of scaling back oil consumption (ceteris paribus, which I also should have said) are not worth it. Again, I phrased that poorly, so I apologize.
floccina writes:

The arguments for energy independence fall apart if you just take a closer look.

Petroleum can be used cleanly.
The price volatility is not a function of OPEC or of petroleum coming from other countries.
Petroleum consumption does not require the USA to stay in the Middle East.
Petroleum may give terrorists a little more money but it also helps fight terrorism. The rise in terrorism coincided with a fall in Saudi per capita income from 20K to 5K per year. We cannot prevent other countries from buying petroleum.
At some price Canada has the most petroleum reserves; at an even higher price the USA has the most reserves.

For a while there was an idea that resource wealth lead to bad government but no such correlation exists.

Etc. etc.

Jerry Taylor of the Cato institute writes a lot about this.

Brian Wagner writes:

"if your goal is the wellbeing of country A's citizens, for country A's government to impose tariffs or import quotas on a product from other countries"

You've made a hammer out of free trade theory, and now everything looks like a nail. No one has ever defined energy independence as protectionism for the domestic energy industry. Even if they were, last I checked, Exxon was an American company, and they import plenty of oil. Most of our domestic oil production is under the auspices of BP, a foreign company. Energy independence isn't about trade, it's about finding ways of producing energy that aren't under the control of extremist cartels. The ABILITY to produce an adequate supply of a commodity domestically is not the same as RESTRICTING trade in that commodity with other countries.

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