printI’ve spoken frequently on BAB about the folly of “Energy Independence Isolationism,” including about comparative advantage:
“The idea of trade is that everyone does what he is best and most efficient at, and exchanges the products of that labor for stuff others do better and cheaper. To aim for self-sufficiency is to aim for bankruptcy.”
John Stossel expounds on the concept in “The Idiocy of Energy Independence”:
“It’s amazing how ideas with no merit become popular merely because they sound good.
Most every politician and pundit says ‘energy independence’ is a great idea. Presidents have promised it for 35 years. Wouldn’t it be wonderful if we were self-sufficient, protected from high prices, supply disruptions and political machinations?
The hitch is that even if the United States were energy independent, it would be protected from none of those things. To think otherwise is to misunderstand basic economics and the global marketplace.
To be for ‘energy independence’ is to be against trade. But trade makes us as safe. Crop destruction from this summer’s floods in the Midwest should remind us of the folly of depending only on ourselves. Achieving “energy independence” would expose us to unnecessary risks — such as storms that knock out oil refineries or droughts that create corn — and ethanol — shortages.
Trade also saves us money. ‘We import energy for a reason,’ says the Cato Institute’s energy expert, Jerry Taylor, ‘It’s cheaper than producing it here at home. A governmental war on energy imports will, by definition, raise energy prices‘. Anyway, a ‘domestic energy only’ policy (call it ‘Drain America First’?) is a fantasy.”
Read the rest here.
Yes, let economics be the driver. But where silly, hysterical government regulations are driving up prices of domestic energy production, this should stop. A prime example of this is nuclear energy. France get 80% of her electricity from nuclear plants.
Energy Independence is a fantasy (especially in regards to oil) but there are benefits to developing our own energy supplies. We have the largest coal and oil shale reserves on earth. Oil shale is cost-effective when oil is above $90. Developing that resource would increase global supply, reducing price. Also, it would reduce the market share of hostile, backward regimes that we’re in bed with because we need their oil. Maybe I’m missing something, but I don’t think you can go wrong with the US getting into the game.
[Exactly as was said in “The Goods on Gas.”–IM]
Amen to you and John Stossel! What – you don’t grow your own bananas and coffee (banana and coffee independence)? Actually, Georgia (of the Caucasus mountains) “has sizeable hydropower resources” according to Wikipedia so let’s send the troops in now, annex Georgia, and kick out Vlad and his evil Rooskies!
Eh. I should’ve known you said it first. 🙂
Actually shale oil will probably be profitable at oil prices much below $90.00 per barrel. I’ve read estimates of cost of production of $38-$65 per barrel (http://www.wtop.com/?nid=116&sid=1444382). Those initial estimates may be high. They used to say Alberta’s tar sands couldn’t be economically recovered and now Alberta’s oil output is around 1-1/2 million barrels per day and said to be headed to 4-1/2 million barrels per day. Because of Alberta’s tar sands Canada is rated as the number two country in terms of oil reserves now. As additional evidence, BP just bought a huge section of the Rockies in western Colorado that has shale oil along with making water rights purchases. Large amounts of water must be converted to steam in order to heat the oil in the shale to make it flow well enough to be pumped out. They have already constructed a small test refinery in Denver purpose built to refine the shale oil they expect to get out.
The smokescreen is there along with the global warming scam to get us to accept the final solution — energy rationing with heavy taxation. This will support the tax pigs whether the dollar collapses or not (and it might!). The hand that controls the valve of your access to energy controls your life.
I think that this rebellion for ‘independent energy’ is actually a result of a deeper, more awful problem in the American public; ignorance of the science of economics.
Probably the worst thing that can be said about economics is how people attempt to see the outcomes of a certain policy in favor of their own, according to their political beliefs.
Take a recent article on Mises.org, where an Austrian author makes the common sense claim that government work jobs do not create wealth, they just tranfer wealth around by the political, not productive, means.
It took all of ten seconds for the established armchair economists of this world to make posts containing more BS than a cattle trail this side of Texas. What is the difference between people voting for a road or energy institution to be created for the public? (Misunderstanding of the difference of State versus Market in production), and my favorie, ‘just because the government might destroy some jobs in making roads and public energy institutions, doesn’t mean that it doesn’t create them later (broken window fallacy, uh, sheer idiocy).
The ‘Energy Independence’ crisis is just an example of how people don’t understand economics, unfortunately some economists included. Until the base problem of ethics of liberty and economics is solved, we will deal with issues like this all the time, as the American public just hasn’t a clue.
One thing is for sure; it annoys and angers the hell out of me. No man has an excuse to be an idiot, and no idiot has an excuse to be stupid. There is nothing difficult about 90% of all economics. What is difficult is getting the American people to stop having down syndrome.
I cut both ways on this issue. I’m in agreement with both the article and the commentators that government involvment in the energy marketplace is a bad thing, and that the “energy independence” movement is a shell game, akin to global warming, as a previous comment stated it. On the other hand, the concept of self-sufficiency is a good thing, as much as it can be achieved, beginning at the individual level. In such a scenario, would a person be at the mercy of nature and nature’s God? Absolutely. What’s better, I ask? Being at the mercy of God or at the mercy of the marketplace, whether it is controlled by government or not? I’m in the minority in the opinion that it’s better to be at the mercy of God — I recognize not all choose to recognize Him — yet freedom itself is directly tied to one’s control of their own resources. I have no qualms with trade in and of itself; I do take issue in forcing everyone to be servant to trade.
That being said, I still think the political posturing on “energy independence” is a complete scam. I don’t trust a word either one of the candidates (or most politicians, for that matter) say.
The great joke in this debate on energy independence and economics is the pipe dream that free trade actually exists anywhere.
Shaun – no offense, but your post is nonsensical. I have no clue what you are talking about. Please read some books on economics.
There is so much wrong with your post in terms of fuzzy logic and hazy thinking that I don’t really know where to start. I’ll first say that it’s not possible to be a ‘servant’ to a voluntarist market. ‘Forcing’ someone to take part of a pacifistic entity like capitalism makes no sense (like almost all of your post).
Mr. Woods, your comments are exactly what I was talking about in my previous post.
To many people – such as yourself – the market is some some of vague entity that one is a serf to – commercialism and all that. What is the market doing today? what regulations does it need? is there a better system than the free market? I don’t really believe all of those economists – I think that X is the best policy option – etc.
You, like other people, are arguing in a way that makes me realize that you don’t understand a fundamental concept of reality – the market is not political; the market has nothing to do with religion; the market has nothing to do with independence, dependence, and certainly not slavery.
To wit; the market doesn’t exist. Neither does capitalism. Neither does the idea of being a ‘slave’ to this ‘entity’.
The market is just *reality* Mr. Woods. It is how people deal with scare resources. Economic law is the same as physical law. We don’t argue about what goes up must come down. In the same way we can’t argue against free trade, or make silly statements concerning God or forcing people to adopt a voluntarist means of life – something so absurd that I wont go into detail about it.
Please get educated. If you are posting on this blog there is no excuse for you not to be.