Sunday, August 24, 2008

Dependence on foreign oil

Someone -- a supposed Libertarian -- asked my thoughts about our dependence on foreign oil. My response:

I do not fear dependence on foreign oil anymore than I fear dependence on Canadian bacon (or West Virginia bacon, for that matter). In a free society with an advance division of labor, everyone is dependent on everyone.

Take government out of the equation, get over the fear of dependence, and let the market decide when alternative fuels are efficient. Playing with policies, regulations, tariffs, what have you, only muddle the mess more.

Question: Now that oil is on the way down, how do the bozos in power still blame the mess on speculation? Or will the folks in Washington find another group to condemn?

6 comments:

Anonymous said...

How do you handle the dependency is a national security issue which is the role of government?

An unscrupulous foreign country or company could use our dependency to destroy our economy and allow for an economic or even real invasion of our country. Like a drug dealer, an oil supplier can hook the American economy on cheap oil and then raise the prices to an untenable point. During the lag between market replacement, they could use the resulting economic turmoil to sweep up large portions or our economic base or even to mount an invasion of our soil.

Wouldn't the government be justified to make sure this doesn't happen? If not, isn't it an abrogation of their role of defender of the borders and if so, how does the government accomplish this intervention while meeting your approval?

Jim Fedako said...

Anonymous:

All of our supposed enemies with oil have always sought to trade with us. And, keep in mind, that oil is a commodity. A country -- or group of countries -- cannot stop oil from flowing to the US unless they stop oil flowing to all other importing countries.

Also, countries with oil need our grain and other commodities that we export.

We used to trade with the USSR during the height of the Cold War.

You have nothing to worry about. And do not let government hacks fill you with fear.

Anonymous said...

Jim, what are your thought about groups seeking to manipulate the free market? Groups like OPEC that use collusion to manipulate market prices?

Anonymous said...

I say we trade a bushel of wheat for $112, the price of a barrel of oil.

If the countries with oil don't want to pay for it, then they can eat their barrel of oil.

Obviously, that wouldn't work, but it helps proves your point Jim.

Global Free Trade ensures optmized economies everywhere.

Jim Fedako said...

8:56 -

How is that any different from US Dept of Agriculture setting food pricing floors? Neither help you or me.

By the way, the cartels quickly breakdown and price move toward equilibrium. Yet US Detp of Ag's floors remain.

So, in the end, are you advocating for higher taxes and additional government spending on research for oil substitutes? Do you that much faith in government?

Anonymous said...

I think that the role of government (re the economy) is to spend money on large infrastructure projects. Projects where the economic benefit takes years to realize. Projects that are too long-term for short-sighted corporate America to undertake. Interstate highways are a great example. No corporation could or would have ever started or completed such an endeavor. Yet we all now realize the benefit of this highway system.

Investing in research for alternative fuels COULD be much the same. I'm playing devil's advocate here by the way.