ARTICLE: "Energy Independence: A Dry Hole? Experts Across Political Spectrum Challenge 'Emotionally Compelling' Slogan," by John J. Fialka, Wall Street Journal, 5 July 2006, p. A4.
It is the quintessential irrational slogan of our era, one that places all economic logic secondary to political (and op-ed) opportunism: "Energy independence for America!"
I'm sorry to see Kerry dip into that one recently, but he's in good cynical company with our current president, a recent convert himself.
The truth is, our consumption per thousand dollars of GDP has declined dramatically over the past 30 years, making oil far less crucial to our economy. In 1973 it stood at roughly 1.4 barrels/1kGDP. Now it stands at roughly 0.7 barrels, or a decline of roughly 50 percent.
Not bad for "oil addicted" America, whose only true sin is growing our economy so dramatically since 1973.
But even there our total oil consumption has risen only from about 17 million barrels a day in 1973 to about 21 today. Again, not bad.
The real issue for many is one of imports, which stood at only 5 mbd in 1973 and now sits about 11 mbd, so shifting from about one third of our oil use back then to roughly 60% now.
Still, about the only thing dumber than describing that as an addiction is calling for independence. C. Fred Bergsten, director of the International Institute of Economics, calls the notion "ridiculous," because it implies that "price doesn't matter, that you'll pay any amount to decrease your reliance on imports--and that would be crazy."
Instead, Bergsten, like me, calls for more cooperation between us and rising China (with its skyrocketing demand for foreign oil), calling us "natural allies" because we're both big consumers sitting on the same side of the table opposite OPEC.
Ah, but we can't have alliance with China, can we? That would ruin all those plans for high-tech weaponry we don't actually need for wars we won't actually fight against opponents that won't actually materialize. Calling for energy independence fits that rationale nicely, because it begs America to beg off from trying to connect the Middle East or even to seek Chinese cooperation in that effort. Instead, let's go autarkic on energy, hunker down, keep our powder dry... you know the story.
Strange bedfellows indeed.
But if we stopped all imports from the Middle East, wouldn't the Middle East stop being a security issue? Well, as one expert points out in this piece, we don't import any Iranian oil and haven't in decades. So much for that theory of disconnectedness leading to security.
But the real weakness here is that autarky in any form is not a realizable strategy in an interconnected world, whether you're talking energy or R&D or manufacturing ("Buy American!") or the service sector ("Traitor CEOs selling our jobs to damn furreigners!"). The network of globalization itself becomes the security issue, so building in resiliency is the answer, not the false dream of autarky.
We need new rules to manage this far more integrated and connected security order, to shrink this Gap and grow this Core by keeping it safe. That's what my books are all about: 21st century answers to 21st century problems of war and peace.
And that's what Enterra Solutions is all about, leading that charge (as it should be) from the private sector.
Sure, I could sell more books by peddling more fear and making it all seem so much simpler than it is (we need a Manhattan Project on X...), but I like to sleep at night, and I fear intellectual dishonesty more than anything--even obscurity and failure.
But the truth is there is no logical trade-off between connectivity and security, or between efficiency and security. That's the gospel Steve DeAngelis and I are preaching, and it sells because it speaks to our true ingenuity as Americans: not running away from tough problems but running toward them.
Great piece by Fialka. Pound-for-pound, as good as anything I've read in the last five years.
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Comments (5)
I think that there is a very dumb case for energy independence and it's the conventional one that you skewer in your post. But there's a smarter one too. I believe that cheaper energy will lead to faster Gap shrinking all other things being equal.
Economic growth sucks up surplus labor and sends entrepreneurs and global corps alike seeking out cheap labor to throw into the maw of the global economy. Cheap energy leads to greater economic growth. So our largely exiting the energy import market via energy independence leads to an adjustment in that market as the sellers look for new customers for their product and the buyers look to invest that freed up capital elsewhere. The Gap is the ultimate destination for both.
Now ruleset reform is still the major driver in Gap shrinkage but let's not completely put aside the benefits of a global economic boom riding on top of cheaper energy for all. If energy independence gets us there without major disruption to our own economic growth, there might be some good in it after all.
Posted by TM Lutas | July 7, 2006 3:46 PM
I too think its great that we grown our economy and have gained more efficencies as reflected in the ratio of oil consumption to GDP$. However, this is not necessarily a measure of dependency or vulnerability (or lack thereof); one might suggest its a measure of oil's leverage. One would need to do an analysis to discern oil-dependent GDP$ from non- oil-dependent GDP$ and how that may have shifted; I would guess this would be fairly difficult to do (e.g. the high-tech software engineer's work might be labeled non- oil-dependent but if he couldn't get the petro to get to work ...)
As we grow, our heart becomes a smaller percentage of our body mass, but we still find it fairly difficult to live well with one that has become significantly impaired. Our economy is very vulnerable to an 'oil heart attack.'
This, of course, does not take away from the notion of energy independence being a pipedream.
Posted by salsabob | July 8, 2006 12:05 AM
No one argues against cheaper energy or moving down the hydrocarbon chain, neither of which implies or requires independence. Our steady progression on both fronts is a given, proven over centuries.
Our vulnerability on oil is price, not access. And all a price attack does is spur new investment in traditional and nontraditional sources and boost R&D in new technology. The worse the shock, the faster we move--hence OPEC, having learned its lessons decades ago, no longer dares shock. Thus the meaningless talk of "addiction."
Markets respond when it makes sense, money-wise, not out of vague geostrategic fears, and that's a good thing.
Posted by Tom Barnett | July 8, 2006 9:41 AM
Salsabob:
I would suggest that there would be very little in our economy that is not "oil dependent". It's not just gasoline and power generation in play here. There's a wide variety of manufacturing concerns and low end uses inside nearly every industry. But certainly reducing the percentage of consumption for fuel and energy generation would greatly improve our overall lot.
Where the illusory oil independence becomes truly useful(over and above reduced pollution) is outside our own economy, as Lutas points out. We currently use more than any other country and by taking ourselves out of the game would lower overall demand (at least until the addition of new markets raises demand again). As demand falls, price falls.
Falling prices have two positive effects. First, it lowers the barriers to entry for emerging economies. Second, it reduces the influx of petrodollars into the Gulf Gap, both defunding the bad elements and positioning the good elements for a better long term economic foundation (they won't be able to sell oil forever).
This is where politicians of all stripes are dropping the ball. What we need is a joint U.S.-Sino-EU new energy project to develop new energy sources and reduce consumption. Get all the major players out of the way to make room for the up-and-comers, and simultaneously quit bankrolling the bad actors.
Heh. Talk about a pipedream...
Posted by R VanValkenburg | July 8, 2006 11:29 AM
Not sure exactly how pertinent this is, but. . . Is our problem energy independence or energy diversity? Even if 100% of our oil was produced domestically, we'd still be in a bind because of pollution, demand changes and a non-renewable supply. The same if we relied totally on foreign oil, or totally on nuclear power, or whatever. It's relying on one source for so much of our energy needs that's putting us at risk, not the physical location of the source itself.
Posted by Michael Griffin | July 14, 2006 4:05 PM