The Worst Thing to Happen to America?
At a panel on “Energy, the Environment and National Security” at this morning’s Center for American Progress/Century Foundation Conference, America in the World, three distinguished panelists agreed on one unsettling point: Energy independence is bad.
Huh?
General Chuck Wald, former deputy commander of US forces in Europe, John Deutch, former Director of Central Intelligence, and Catherine Zoi, of the Alliance for Climate Protection, all said that energy independence is neither possible nor a worthwhile policy goal. Deutch said “energy independence is not a constructive idea,” and Wald proclaimed that “energy independence would be the worst thing to happen to America.” Each asserted that we will remain dependent on energy imports, and either expressly or implicitly identified energy independence with what they called “energy isolationism.”
Alright, I see their point. It’s not immediately clear that even the optimal combination of conservation and alternative energy technologies can keep pace with growing demands for energy, meaning we will continue to need energy imports to fuel the US economy. Cutting off foreign energy sources would, by that reasoning, make us less competitive, and more “isolated” in a negative sense.
But there’s another side to that coin.
Energy is a zero sum game. Unlike trading technologies or other complex goods, trading energy commodities does not create value. In fact, the immutable laws of physics dictate that transmission of oil, gas or any other store of potential energy costs more energy the farther it has to travel. At some point, in fact, you could expend more energy to transmit a gallon of gas than you could ever get out of that gallon, resulting in a net energy loss.
Thus, importing energy from abroad only works as long as that energy is both cheaper to extract and transport than it would be to generate here at home, and–here’s the real key–as long as the governments that control the resources are willing to sell them to us.
In the first place, oil from the Middle East and Russia is only less expensive as long as it is in plentiful supply and is not heavily taxed by those states–neither of which is likely to remain true in the coming century. And second, as we all know, the governments in question include Saudi Arabia, Iran, Russia, Venezuela, and a few others we’d prefer not to have to pay to keep our cars running and our food fresh.
The whole point of energy independence, then, is to counter the ability of unstable and hostile regimes to influence US policy and economic life by controlling the international flow oil and gas. We’ve seen the effects of short-term manipulation of the oil market by producing states before, and today we’re seeing the impact of long-term increases in oil prices as both consumers and producers recognize that oil reserves are not unlimited.
The experts I cited above object to the energy independence slogan only because they perceive it as a red herring. They would argue it is a distraction from broader conservationist goals that will, in reality, have the same important impact in reducing our dependence on foreign oil, while combating global climate change by reducing carbon emissions. Certainly, climate change is very important, and a preoccupation with energy independence for security’s sake alone might lead us to transition to US-sourced fossil fuels, like coal and oil from ANWRA, that produce just as much harmful carbon as Middle Eastern oil and gas. But to call energy independence a bad idea destroys the only common ground in this debate, and hence the best chance for meaningful progress on both national security and climate change.
Policymaking is 10% reasoned argument and 90% political compromise, as I’ve been very recently reminded, and I am surprised that such an impressive group of Washington insiders would be so short-sighted about our national interest.
Related posts:
Matthew –
I must say that you were probably not a student of economics. If you had been you would understand that economic independence is not only highly difficult to achieve in the modern global system, but also undesirable. I was also at this panel discussion and it was obvious to me that the panelists were being realistic in their advice. You say that energy independence is a point of compromise, but among who? Between nationalists and militarists on the far right and protections and isolationists on the far left? Uniting the extremes is not what this nation needs. You must also acknowledge that interdependence is a two-way street (like most are). We are dependent on rogue regimes for their oil, but they are dependent on us for our money. Break this connection and certain unintended results will result – like more poverty in these nations, which must be seen as a potential source of resentment and future turmoil.
Comment on June 13, 2007 @ 8:01 am
Jeffrey, the upshot of your criticism is that we need to keep buying oil from anti-American governments because if we don’t, they’ll become poorer and resent us even more. While indeed I have also been a student of economics, I am most certainly a student of history and international relations. Last I checked, the countries that have benefited most from western oil dollars are those whose anti-Americanism has only grown over time.
Comment on June 13, 2007 @ 8:18 am
So, is that a reason to end our economic relationship with them? Or does it suggest we should worker harder to mend our relationships? Stopping to purchase oil from them will do very little because the of the growing prosperity of China and India. Oil producing nations will still amass large petro-dollars, regardless of us becoming ” energy independent.” Focusing on more efficient and alternative energy is certainly important for purposes of global warming, but it seems irrelevant to eliminating anti-Americanism. Such negative views of the US are not going to end by severing our economic relationship with these nations. If anything, it will push them into an even more anti-American posture.
Comment on June 13, 2007 @ 9:21 am
[...] This week, there’s been a sudden flurry of questioning the economic value of free trade — on many fronts. Hillary Clinton came out against the Korea-U.S. Free Trade Agreement. Senators renewed their bipartisan effort to bludgeon China about the value of the Yuan — this time by calling China a “currency manipulator” to trigger sanctions rather than by proposing a tariff to directly “compensate” for the manipulation. And one of my colleagues on this blog, Matthew Rojansky, was shocked to discover that some people think that aiming for energy independence (that is, avoiding all trade in energy) is not a smart goal. [...]
Pingback on June 15, 2007 @ 4:51 am
This is my brain when it’s cranky…
Matthew Rojansky has a post at Across the Aisle on energy independence that caused me to bang my head against the wall in sheer frustration for a few moments. Rojansky reacts to a DC panel on energy, the environment and……
Trackback on June 15, 2007 @ 6:03 am
There is, however, an important national security benefit in purchasing oil (etc.) from outwardly-hostile foreign regimes. Despite their rhetoric, most anti-American governments are not stupid — first, they are under no illusions that they can seriously stem US influence in the world; second, and more importantly, they are well aware that our money (from purchasing that energy) is keeping them afloat, thus keeping them in check.
Hugo Chavez, to cite an example, is becoming increasingly autocratic, and has never hesitated to level creative criticism at anything American (sulphur odour on the podium, anyone?). Nevertheless, the World Factbook estimates that oil accounts for 90% of Venezuela’s exports, over half of which go to the United States. The extrapolation, given some other statistics on that page, is that something of a quarter of their national budget is entirely dependent on us.
When it comes to foreign regimes, we’ve always placed a heavy emphasis on stability over other considerations, for reasons that currently are quite apparent in Iraq. Were we to cease oil imports from countries with disagreeable government types, we’d severely weaken those governments, causing new insurgencies (Islamist terrorists in Sa’udi Arabia, narcoterrorists in Venezuela, the mafia in Russia, etc.) that would only further cripple the world’s energy network.
Ultimately, as long as our energy is generated by setting fire to things, I agree with Zoi — independence is not possible. The distribution of these resources, coupled with our increasingly insatiable demand for them, means that unless and until a new mechanism for energy creation is developed, we will always be dependent on foreign energy sources.
Comment on June 16, 2007 @ 10:57 am