the price of oil is set internationally.

So what? The price of wheat is also set internationally. When it goes up, we benefit. Cause we are a net exporter. If you are net importer of something, youre hurt when the price goes up. If you are roughly in balance, then you (taking the economy as a whole) are neither hurt nor helped when the price goes up.

This is NOT to say that net self sufficiency is attainable or desirable. It IS to point out that the fact that wed still be part of a world market does not mean being net self sufficient wouldnt be significant.

As long as world trade continues, the United States will never be fully "independent" of any commodity, including energy. Sure.

But I fail to see why improving vehicle fleet fuel economy 20% (easily done) or 40% (harder, but doable), improving electricity efficiency 20% (easily done) or more, etc. would not be immediately beneficial in dozens of ways to the United States, its Citizens, and its consumers. Not least in reducing the insane pressure to believe that the US has some pressing need and divine right to order political and cultural affairs in the Middle East.

You can call Amory Lovins a nut if you want, but he and his institute have correctly called every energy trend of the last 30 years (and I was inside the energy industry when the campaign to discredit him was in full swing). The big oil boys have had their day; howzabout we give the other program a try? Just to see how it works?

One downside: conservation doesn't produce big profits for any concentrated entity. Higher profits for many distributed entities, yes, but not concentrated profits. Could that be an issue here?

Cranky

Crank:

Why not just leave it up individuals to choose how much oil they want to consume? Or do you hold the paternalist collectivist's belief that the common folk are too dumb to know what's in their own best interests, and need smart people to tell them how to live their lives?

This is NOT to say that net self sufficiency is attainable or desirable.

Not being dependent on despotic, unstable, and not particularly friendly others is very desirable.

Unfortunately, it's not realistically attainable.

I don't have a problem with conservation per se. The problem is that a lot of the people associated with the environmental movement remind me more of religious types than people who care about getting the science right- basing arguments on ideas of morality or fairness, etc, instead of objective measurements and cost/benefit analysis*.

*for example, global warming: a warmer planet translates directly to a longer growing season, which is a boon for agriculture, and plants thrive as co2 in the atmosphere increases. But the environmentalists never mention the possible benefits- they focus entirely on the theoretical negatives.

> Or do you hold the paternalist
> collectivist's belief that the
> common folk are too dumb

Sure thing, bartman. The little-bitty problem being that the big dollar oil dudes seem to turn to the common man and the collective quite a bit when they want the United States Armed Forces to protect their trading interests. How about the energy providers being required to pay a direct fee for US military intervention in the Middle East?

"Socialization of costs, privitization of benefits according to the needs (= desires) of the most powerful!". Now there is a libertarian motto I could get behind.

Cranky

Bartman: "Why not just leave it up individuals to choose how much oil they want to consume?"

Cranky's increased fuel efficiency standards won't impinge on your precious freedom to burn oil. You can buy buckets of the stuff and burn as much as you like. My lawn could use another mowing, if that's your thing.

But isn't this topic about a false choice? Conservation or increasing domestic energy production? Both will be fine, thank you. And of course, if we use less and choose to maintain domestic production levels, isn't that a step towards independence?

And why is it ridiculous to use the impossible ideal to describe the goal? "Freedom" is impossible: there are always reasonable limits on individual behavior. "Democracy" is unworkable: information-processing and decision-making constraints merit some power concentrations. "Apple pie": mostly sugar.

How about the energy providers being required to pay a direct fee for US military intervention in the Middle East?

Eenh. They'd just add the expense to the price of the product. Ultimately, the money would come from the same place it's coming from now.

What difference would it make, really?

I wish I had written this comment:

Are conservatives capable of thinking of any economic scheme, which doesn't involve either enslaving a huge group of people or a massive, uncompensated externality?

(in reference to another proposed ethanol scheme)

Cranky

Three words: Total Lifecycle Cost.

One hint: "total" include environmental externalities

Cranky, it is a canard that Big Oil uses the US military as free private security force. I could write ten thousand words on how this is a convenient lie, but it would probably be all for none. Brief point: the biggest loss to Big Oil was the nationalization of lots of long-term concessions between 1967-80, and nary an American rifle was lifted in opposition to those acts. If your beliefs were true, The US would have slapped Cuba-esque embargoes on every country that "stole American assets." But it did not. Curious.

For the record, I think that US forces should only be used for those purposes expressely defined in the Constitution: repelling invasion and repressing insurrection. And I'm pretty sure that if the US didn't have a single overseas base and had not participated in a single external misadventure in the past 50 years, the global oil trade volume and price path would not have been much different.

The whole "use of military to protect oil interests make oil a public good" fallacy is propogated only to further paternalistic centralized control schemes. Why not just come out and say that you think you should be able to force other people to adopt your beliefs, because, gosh and goilly, you're such a smart, thoughtful person and your ideas couldn't possibly be wrong. And you only have everybody's best interests at heart - all you really want to do is re-educate those poor minions until they accept the wisdom of your thoughts.

Brent: it's amusing that you assume I want to consume a lot of oil. I don't. I ride a bicycle, a bus, and use my feet more than a big majority of Americans. It's just that I think other people should be free to choose a different lifestyle than the one I choose for myself. We seem to be in disagreement on that one.

Not being dependent on despotic, unstable, and not particularly friendly others is very desirable

Nobody is dependent upon such people. Many people choose to trade with such nasties, and those people could choose to not trade with the disagreeables if that alternative brought them more utility.

It seems that most of the commenters here are just a little pissed that John Q. Public doesn't do what the commentariat want him to do. Why do all you central-planners bother to frequent an allegedly libertarian blog? Do you think you can convince us to come over to your side?

Why not just leave it up individuals to choose how much oil they want to consume?

Yes, the unregulated free market is best as long as negative externalities don't outweigh the benefits -- which they do in this case.

Or do you hold the paternalist collectivist's belief that the common folk are too dumb to know what's in their own best interests, and need smart people to tell them how to live their lives?

By their nature, negative externalities are often not observable to the average person. Also, there are cases such as the tragedy of the commons where everyone knows what they are doing is bad for society as a whole, but still does it.

One of the basic assumptions of conservative economics is that the universe is designed so that the unregulated free market always produces the best results. This belief is mistaken.

"They'd just add the expense to the price of the product. Ultimately, the money would come from the same place it's coming from now.

What difference would it make, really? "

Well, Bartman, energy conscious people like you would not be subsidizing Hummer drivers. Properly set taxes are a way of fairly paying for the costs of externalities.

bartman,

I'm scratching my head trying to figure out our massive involvement in Iraq if not for oil , as well as the standing up of a whole new fleet (the Fifth) in the 1990s, without oil as a factor. (There is another factor, but it is known to raise hackles, so I'll let it go for now.)

I could maybe understand the Gulf war as an effort to safeguard a stable 'New World Order', and I could maybe understand 'taking out' Saddam. But what explains the seemingly permanent bases being built in Iraq and the huge embassy being built if not a desire to dominate that country, its oil production, and that of the entire region.

It seems that most of the commenters here are just a little pissed that John Q. Public doesn't do what the commentariat want him to do. Why do all you central-planners bother to frequent an allegedly libertarian blog?

The commentariat here seems to skew academic, with the usual knock-on effects (such as paying more attention to theory than practice, thinking that the solution is putting Really Smart People in charge, etc).

Why do all you central-planners bother to frequent an allegedly libertarian blog?

I've never understood why people don't like dissenting opinions at blogs.

Another problem with this post, the 'pipedream' language. Now I suppose it may be impossible to be totally energy independent, but does that mean we can't produce more of our energy, or shift to different imported sources, thus sending less money to the Saudis and become *less* reliant on a part of the world we don't really understand.

There is nothing wrong with energy independence as a goal. As an expectation, sure, it's fairly laughable. But if the stated goal is 60% (or whatever) domestic energy production, what would we end up with?

We would end up with plans to get us just to 60%, and just in time to make some arbitrary deadline. Then, energy demand would increase faster than we can meet it, dropping the domestic energy percentage back below 60% because of typical short-sightedness.

Point being, using a generic term like independence gets people thinking about the best we can do rather than the least we need to do. At least in theory...

The reason has to do with the cost of production. In some places, it costs more to get the stuff out of the ground than in other places.

Really extreme example: producing oil from the tar sands/shale up in Canada is estimated to cost between $15-20/barrel. Saudi Arabia can get a barrel of oil out of the ground for less than a dollar.

When oil prices are high, they can both make a profit.

If oil proces drop to, say, $25/barrel, Canadian producer's margins get squeezed, but the Saudis are still raking in the bucks.

If oil prices go to $18/barrel, Canada's boned... they'd lose money on every barrel sold... but the Saudis would *still* be raking it in.

This is a big part of the reason diversifying away from the Saudis is a pipedream- they have the lowest cost of production, they're going to be the last oil producer to shut down.

No matter what the US does.

It's possible that nuclear powerplants could eventually produce enough electricity to allow the US to move to hydrogen, but that would require substantial regulatory changes and would take a couple of decades to build the plants and the infrastructure.

Simply put, disengaging from the middle east this side of 2030 or so isn't a possibility if we want to continue to have an industrialized economy.

rosignol,

stipulating everything you said, the only way we are going to get to 'disengagement' in 2030 is by starting today to come up with things like more ethonol production, skewing 'the market' to reward those who use less petroleum, etc.

And for those of you who are terrified of government action, just consider that one of the ways we got here is the vast expansion of the interstate highway system -- one of (if not the) biggest federal government infrastructure projects of all time.

Is disengagement the goal?

Even if we're not giving them money, other people will be, and the ideological hostility (the infidel thing) is still going to be there, and we're still going to be doing things that will piss off the jihadis- one of Bin Laden's complaints was about how the Moors were run out of Spain in the 1400s.

I don't know what those guys' problem is, but I'm pretty sure disengaging from the middle east isn't going to solve it.

If there is a finite amount of oil (which is unquestionably true), and we are burning foreign oil now, doesn't that mean we are saving domestic oil for ourselves later? In other words, in the life cycle of the oil age, wouldn't it be better to burn foreign oil first, and save domestic oil, as an insurance policy? In other words, isn't energy dependency, rather than energy independence, a good thing?

Steve

> wouldn't it be better to burn foreign
> oil first, and save domestic oil, as
> an insurance policy?

I don't think you will get a real estimate of reserves without paying at least $1000 for it, but this chart

http://www.eia.doe.gov/emeu/international/reserves.html

shows the US with 21 billion barrels, Venezula with 80 billion, and Saudi Arabia with 260 billion. So there isn't much domestic oil left to pump.

Unless we take over Canada, but it is not noted on the chart if that 178 billion is liquid oil or includes the tar sands. I for one doubt anyone will ever extract anything from those sands.

Cranky

PS Oops - looked at the footnote again. The 178 for Canada DOES include the tar sands, so mark that one lower.

> it is a canard that Big Oil uses the
> US military as free private security
> force.

Good. Let's start by bringing all US military forces home from the Middle East then.

Cranky

1. I am quite in favor of cost benefit. Yes global warming would extend the growing season. How much of a benefit that really would be depends on many things, including rainfall patterns, and the shear costs of shifting crops to new latitudes, where infrastructure would have to be modified or replaced or added for the first time to accomodate (will the wheat silos in North Dakota work for corn that moves north from S Dakota - do the northwest territories have any silos at all?) It is of course hard to debate those very interesting details when one side is still insisting that global warming is a myth.

2. Re: foreign policy. I doubt that reducing our use of imported oil would make the hatred by AQ go away. It would, however, increase our policy flexibility. Think of the days headlines, when someone says we should do X to Iran, and its responded that we cant, cause it would make the price of oil soar. If we produced a larger proportion of our own energy, that would be a lesser constraint.

3. If we can change our enery consumption patterns along with other advanced economies, we can impact the world price. Since most of the oil exporters (sorry Canada) are people using their oil, if not to do nastiness, like Iran, at least to avoid reforming their economies and societies (Venezuala, Russia, Saudi) it would seem to be a sigficant net (external) benefit to reduce the price of oil.

4. Non-libertartians posting here - this is one of the few non-hystercial centrist blogs with comments.

Mitchell,

Your quote on gaining energy independence

"by starting today to come up with things like more ethonol production"

Illustrates why much of the discussion on energy production is wishful thinking backed up by bad policy. Ethanol production is subsidized as a political gift to ADM and the corn producers. It has a low energy yield (the vast majority of the inputs that are used to grow corn come from petroleum). It contributes to environmental damage (soil depletion, erosion, and toxic runoff).

Yet for some reason people keep bringing it up as a serious idea for energy production.

Cranky,

The oil price collapse of 1986 made implementing lovin's ideas not as economically attractive as they were in high energy price days.

Energy consumers have a built in economic interest in using energy efficiently because it puts money in their pocket. In the US energy usage per amount of GDP has steadily declined over the years

If the US was not in the middle east the europeans and japanese surely would be. They get more of their oil from the mideast then we do.

Using the US military to keep international trade routes and channels open in the mideast accomplishes two things most people never think of.

1. It decreases the chance of conflict between nations who import oil from the mideast by assuring that trade routes will remain open. This is not a trivial positve impact, the history of conflict related to highly armed, militaristic, force projecting european and asian nations is ugly.

2. It acts as an international aid project by allowing other countries to use less of their GDP to producing a military force large enough to maintain shipping routes out of the mideast.

rosignol wrote:

"*for example, global warming: a warmer planet translates directly to a longer growing season, which is a boon for agriculture, and plants thrive as co2 in the atmosphere increases. But the environmentalists never mention the possible benefits- they focus entirely on the theoretical negatives."

Not necessarily.
http://www.theglobeandmail.com/servlet/story/LAC.20060630.CROPS30/TPStory/Environment

TJIT,

I mention ethanol only as an example. You also made the assumption that I was talking about ethanol from corn. But whether or not that specific technology is viable, there are others on the horizon. Ballard Power of Canada, for example, is developing fuel cells with an output of 1 kw and capable of powering a home for 10 years. There are also all sorts of things we can do in city planning, transportation etc. to reduce dependence on crude oil.