Nothing the United States can do in energy policy is more important than an mpg increase. Presidents George Herbert Walker Bush, Bill Clinton, and, until last week, George W. Bush had all refused to face the issue of America's low-mpg vehicles, which are the root of U.S. dependency on Persian Gulf oil and a prime factor in rising U.S. greenhouse-gas emissions.First of all, we're not particularly dependent upon Persian Gulf oil. We get most of our oil from the Americas: Canada, Mexico, Venezuela, etc. In the 12 months ended October 06, only 16% of our petroleum imports and 11% of our total petroleum usage came from the Persian Gulf. That's slightly less than we imported from Canada, alone.
Nor can we hurt the Persian Gulf countries through conservation. If we do succeed in conserving enough oil to effect the global market, the effect will be a cut in the price of oil. The Persian Gulf nations, however, are the low-cost suppliers of oil. A sufficient decrease in the price of oil will only shift consumption towards the Persian Gulf and away from the high price producers, such as Canada.
4 comments:
If oil from the Persian Gulf isn't that important to us, then why have we been engaged in over sixteen years of continuous high- and low-intensity warfare there ?
While the amount of oil produced in Canada and the U.S. is slowly rising, Mexico and Venezuela's oil production is rapidly diminishing, so over the next decade the U.S. will be getting less oil from the Americas, and more from someplace else, if current usage trends continue.
That "place" will probably be primarily the Middle East.
However, if we can slow or stop the rise in consumption, then oil prices should fall. As you point out, the Persian Gulf nations are the low-cost producers. However, the key point is that their economies are also TOTALLY DEPENDENT on exporting oil.
If the price of oil were to fall to, say, $ 25/bbl, then Canadian oil producers would be breaking even, American oil producers would be making money, and Iran and Arabia would be on life support.
Consumption of oil would only shift towards the Persian Gulf if producers in other places stopped production, which wouldn't happen in great numbers until prices dropped under $ 20/bbl.
So, it's like chemotherapy: We poison the whole system, but cancer cells feel the pain more than other cells, and die off first.
The Persian Gulf is the cancer. They're more vulnerable to price drops than anyone else.
You've written in the past that we cannot starve Arab terrorists of funding by reducing their sponsors to paupers, because terrorism is so cheap to accomplish.
However, I've never seen you respond to my assertion that sponsoring terrorism is a discretionary item, and if oil revenues to the Persian Gulf were to be cut in half, terrorists' budgets would be cut by 90%.
The Iranian people, for instance, are already unhappy about all of the money going to Hizbollah and the Palestinians. What are the odds that they would continue to support such expenditures by their gov't if their economy went into a depression ?
It's been much longer than 16 years and that has little to do with the Persian Gulf. It has more to do with the middle east generally.
First, part of our involvement there has to do with our role as the leader of the free world. For example, we inherited (took?) from Great Britain the responsibility for enforcing the freedom of the seas. That has played a large role in our involvement in the middle east.
Second, although connected to this first point, is that we have an interest in the stability and growth of the world economy. Our largest industrialized world trading partners, the EU and Japan, are both much more dependent on Persian Gulf oil than we are. A lot of what we're doing is protecting their economies. Because we're nice? Yes. But also because we're committed to stopping either from having the ability to project military force outside of their immediate neighborhoods. And because we're a trading nation. Jefferson didn't go to war with the Barbary pirates because of oil.
Fourth, some of the Persian Gulf nations are friends of ours. Iraq, for example, and Kuwait. Saudi Arabia, in months without an "r" in them. The UAE and Qatar. They're not allies and we can't count on them, but we're better off with the present governments than with them being controlled by Saddam or the Iranians.
Fifth, it's just bizarre to believe that the United States is not going to be interested and involved in the Holy Land and its environs.
Sixth is, of course, that our economy is highly dependent upon petroleum and the middle east has a lot of it. This has nothing to do with what Easterbrook said. We are not particularly dependent upon the Persian Gulf and not likely to be dependent upon it for the foreseeable future. It is hard, though, to overstate how dependent we are on petroleum. I'm tempted to use the metaphor that petroleum fuels the engine of our economic growth except that it wouldn't be a metaphor. If all oil went poof tomorrow and disappeared, we are in the best position to recover -- but the experience would be, as the English would say, tedious.
That means that we are dependent on the world market for oil. Not only is it necessary for our own economy but also for the growth of the global economy. As I am a great believer in the beneficence of economic growth -- it not only lifts people out of poverty and makes their life materially better but it also creates a bourgeoisie, which is the source of all political merit. Moreover, as you note, an increasing world market price only puts money in the pockets of the oil states, where it is misused and prevents the establishment of a modern economy.
Finally, this idea that we can conserve ourselves out of trouble is fit only for the left. It is a mirage, it can't work and if it did work, it wouldn't have the effects you believe. To start with the latter point, terrorism is just too cheap to be conserved out of existence. 9/11 is cheap, AQ in Iraq is cheap, Iran is never going to run out of enough money to make IEDs out of a chunk of C4 and a cell phone. The Arab world is never going to run out of idiots willing to blow themselves up. We need to kill our enemies and change their culture because fanaticism never costs too much money.
Good thing, too, because we can't begger the Arabs no matter how hard we try so long as they have petroleum. Let's say that we managed to cut our petroleum usage by 10%, which is I think an unreasonable goal if we're also going to have economic growth. That would be something like adding another field about as productive as the Gulf of Mexico. Are you really saying that discovery of a new field of that size would devastate the middle east?
[W]e're better off with the present governments than with them being controlled by Saddam or the Iranians.
Only because they have oil. Absent oil, why would we care who runs those nations ?
[I]t's just bizarre to believe that the United States is not going to be interested and involved in the Holy Land and its environs.
It's also bizarre to believe that the United States would commit a quarter-million ground troops and a couple of carrier battle groups to meddling in the M.E. if the only draw was religion.
Sure, we'd be involved, but not to an extent even remotely near to what we're now doing, or did in '91.
For examples of how much we might be involved, absent oil, cast an eye over what we've done, and are doing, in So. and Central America since WW II. Pretty small beer.
Finally, this idea that we can conserve ourselves out of trouble is fit only for the left. It is a mirage, it can't work...
Let's say that we managed to cut our petroleum usage by 10%, which is I think an unreasonable goal if we're also going to have economic growth. [...] Are you really saying that [...] would devastate the middle east?
Yes, it would absolutely destroy the M.E.
It worked EXACTLY that way in the 80s. What's changed, that it can't work now ?
Further, conserving our way to a 10% cut in petroleum usage is not only feasible, it wouldn't be particularly difficult, and wouldn't cut economic growth at all.
We are so profligate with energy use in America that nearly all it would take is people switching to smaller cars.
According to the National Highway Traffic Safety Administration, the average gas mileage for all new vehicles sold in the United States in 2004 was 24.7 MPG. (PDF)
However, the fleet MPG for all passenger cars sold in 2004 was 29.3.
According to the U.S. Department of Energy’s Energy Information Administration, in 2006 gasoline accounted for about 45% of all petroleum products consumed in America.
Therefore, if people stopped using pick-'em-up trucks and SUVs for people moving, and bought passenger cars instead, we could save 9% of all petroleum usage with just that one switch.
Further, since Europe and Japan's fleets average over 40 MPG, it's clear that we could easily cut petroleum usage by up to 17%, just by changing the types of vehicles we drive... If we cared to do so.
One criticism of higher-mileage cars is that they're smaller and lighter, and therefore less safe, but that's only partially true.
There are many small cars that are very safe in one-vehicle accidents, that are at a safety disadvantage when colliding with larger vehicles. Mass matters.
However, if the make-up of the American passenger fleet changed, to being primarily composed of smaller, lighter vehicles, then there wouldn't be many collisions between tiny cars and hulking SUVs.
[T]errorism is just too cheap to be conserved out of existence. 9/11 is cheap, AQ in Iraq is cheap, Iran is never going to run out of enough money to make IEDs out of a chunk of C4 and a cell phone. The Arab world is never going to run out of idiots willing to blow themselves up.
Cheap compared to the Pentagon's budget, but 9/11 still cost many millions of dollars to carry out, from conception to execution.
The recent Hizbollah terror strikes cost Iran hundreds of millions of dollars, in munitions and relief monies to affected Lebanese.
Individual suicide bombers are a nuisance, but not a threat on a 9/11 scale.
Good thing, too, because we can't begger the Arabs no matter how hard we try so long as they have petroleum.
Sure we can.
You're focussing on the income, and ignoring the outflow. Even with extremely high oil prices, Iran and Arabia are having problems funding all of the social programmes that they've enacted to keep the masses from revolting.
If oil prices were to be cut in half, they'd be in desperate straits.
David:
Your analysis is pretty darn persuasive.
If anything, your description of the consequences of oil going "poof" tomorrow is far too anodyne.
If oil did in fact go poof, then we would very, very, quickly develop a new appreciation for Malthus.
... increased CAFE standards decrease the cost of each mile driven, which will necessarily lead to people driving more miles.
Ummm. Maybe. Greatly increasing the cost of driving over the last several years had a very small effect -- something on the order of 2%? -- on petroleum consumption. I don't think there is any reason to expect that, say, a 10% increase in CAFE standards would lead to anything like a 10% increase in driving.
Americans, by and large, are so rich that, other than a small amount of regret at fill-up time, doubling of fuel prices has affected us hardly at all.
People drive pretty much as much as they want to, and that desire is scarcely affected by fuel prices.
If I traded in the F-150 for a Mini, I doubt the number of miles I drive monthly would change one iota.
That said, CAFE standards are almost immeasurabely stupid.
If Congress and the President were serious, they would levy a fuel-price stabilizing tax that would peg the price of regular at, say, $3.50 a gallon, compensate with tax reductions elsewhere, and let the market sort out fuel mileage.
But they aren't serious.
Post a Comment