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“Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.”     Milton Friedman

May 1, 2008

Why Energy Independence Is a Futile Way to End Middle-East Terrorism

by tarran

In an earlier post, I discussed the economic damage that “energy independence” would cause to U.S. consumers. In a recent conversation in meatspace, I ran into someone who acknowledged this problem, but argued that the price is “worth it” because when we trade with people who make oil, those people use the wealth to do all sort of bad things, like funding Al Queda. This argument has some merit; I certainly wouldn’t buy bread from a guy who would use the money to fund attacks on his neighbors.

Let’s examine this problem using the infamous Your Black Muslim Bakery in Oakland California as an example. This bakery is the cash cow for a gang that is involved in all sorts of criminal activity, ranging from auto-theft to destroying the stocks of alcohol stores since the bakers religiously disapprove of drinking.

If we take the proponents of energy independence’s approach to this matter, we would be calling for the city of Oakland, through a web of subsidies and taxes, to encourage the development of industries providing alternatives to bread. We would demand that they subsidize spaghetti shops, encourage people to bake their own bread, and tax bread use. We would seek to make bread more expensive for all so that people will consume less bread and stop buying bread from the bakery.

Instead of focusing on this particular bakery, instead of calling for a boycott of that particular bakery, we would seek to deprive all bakers of their livelihoods, make food more expensive for all including those who are desperately poor and have difficulty affording food. This is taking a sledgehammer to swat a fly and very immoral to boot!

But by trying to use violence to change the behavior of their countrymen, especially in a manner so ineffective to achieving their stated goals, the politicians calling for energy independence are crossing the line. People would rightly laugh if the Mayor of Oakland tried to eliminate bread from the city of Oakland as a means of ending the Your Black Muslim Bakery’s rein of terror. People should do the same to politicians calling for “energy independence” as a means of depriving Al Queda of its operating funds.

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8 Comments

  1. i’m all for increased energy independence in the form of drilling our own oil and using alternative energy grids where wind, solar, and tidal systems make sense and can be applied to an economy of scale. no gov funding of that would be necessary if the planning was logical. most people just have a naive idea of energy independence a la “going green” via all forms of economically losing methods e.g. ethanol, hydrogen, and solar/wind planning on an illogical scale vs. the population density to be served. most people simply don’t understand that there is no answer to the Energy Returned Over Energy Invested (EROEI) of petroleum (currently). solar and wind could provide a significantly high EROEI if you factor in time. but these grids can only service a relatively light population density.

    it will be an economic incentive to actually drill our own oil once foreign oil finally gets expensive enough and regulation declines sharply.

    as for the idiotic argument of “funding alqueda,” to that i say why do we fund pakistan, or dump pallets of cash money on iraq, or directly arm militias in baghdad? why do we extend every courtesy to S.Arabia which harbors some of the most well funded alqueda and the Wahabi sect that spawns rich alqueda? why is our President’s extended family such long standing friends of Saudis? why did the Pentagon contract with BinLaden Construction to build our military’s barracks in Saudi in the 90s? why did our govt fund the entire precursor to alqueda in the 70s and 80s? i’d like to see the country come to grips with these facts, fully accept them, digest them, and learn from them before discussing the inevitable consequences of doing legitimate business.

    Comment by oilnwater — May 1, 2008 @ 11:34 pm
  2. tarran–I get the idea that your problem is more with how government is involved in trying to wean us off of Middle Eastern oil, and not the idea of energy independence itself. Would it not be a great thing if we didn’t need oil as an energy source anymore and could tell the Mid East to go screw themselves?

    Comment by Ben — May 2, 2008 @ 8:48 am
  3. Ben,

    Would it not be a great thing if we didn’t need oil as an energy source anymore and could tell the Mid East to go screw themselves?

    The point at which the market determines that oil is less economically viable than some other energy source is the point at which our dependence on foreign oil will disappear…not before. Tarran’s argument, from what I’ve read, isn’t that he has a problem with developing new sources of energy, but that the government is the worst possible tool to make this happen because they invest our money and effort into utter scams like ethanol which is isn’t more energy efficient, isn’t more environmentally-friendly, and isn’t better for us economically. All they’ll tend to do is make us a lot worse off in other areas…like driving up the costs of basic foodstuffs by paying farmers to grow non-food crops for an inefficient energy product.

    This government “energy independence” drive is all being done to perpetuate a fear of the Middle East that exceeds the reality of the situation by utilizing “solutions” that won’t actually help us.

    Comment by UCrawford — May 2, 2008 @ 9:38 am
  4. oilnwater,

    why did the Pentagon contract with BinLaden Construction to build our military’s barracks in Saudi in the 90s?

    Because Bin Laden Construction was, and still is, one of the most successful and reputable construction companies in the world, and they’re the preferred contractor of the Saudi government (who we were doing business with). They were the best option to do business with.

    A better question would probably be, “Why were we building bases in Saudi Arabia in the first place?”. And the answer to that, of course, is that our government likes getting their oil at below market value (or in government doublespeak, “…keeping our oil supply stable”) by helping prop up scumbag dictators who will reward our generosity with a discount…because low oil and gas prices keep the U.S. voters happy and voting for the incumbent. It’s the same reason Dubya subsidized corn farmers for ethanol crops…because it helped to win him votes.

    Comment by UCrawford — May 2, 2008 @ 9:44 am
  5. Tarran:

    I ran across this video on the Cato website which bolsters your point. I’ve long been in the “oil independence” camp but both you and Robert Bryce (the author of “Gusher of Lies” and featured guest in the video) have forced me to check my premises on this issue and do further research.

    http://www.cato.org/event.php?eventid=4516

    Comment by Stephen Littau — May 2, 2008 @ 4:08 pm
  6. Wow Stephen, I hadn’t seen that video. Thanks!

    Ben, we could tell them to go screw themselves now! Let’s say that we told the Saudi king that we would no longer prop up his monarchy what could he do?

    He wouldn’t keep his oil off the market; he still has to sell oil to get the money he needs to purchase food from Australia, nice cars from Europe etc.

    He would probably announce that he would no longer accept dollars for oil. This would, of course, make U.S. dollars worth a lot less in one fell swoop. This would be disastrous for Americans; U.S. citizens are not permitted to ditch the dollar thanks to legal tender laws and the laws requiring them to pay taxes in dollars. However, this sort of tsunami can happen at any time – the inflationary policies of the Greenspan era have made it almost inevitable.

    At this point, though, the monetary policy forced upon the U.S. government in order to fund the Iraqi occupation are pretty destructive too. I think the damage done to the dollar by the U.S. government’s defense of the Saudi monarchy is worse than what would happen if we abandoned the Saudi king to his fate.

    Comment by tarran — May 2, 2008 @ 7:13 pm
  7. lolz, SA will always be able to sell their oil, that’s what China is for now.

    Comment by oilnwater — May 3, 2008 @ 8:01 am
  8. oilnwater,

    I hope you are not loling at my comment “He wouldn’t keep his oil off the market;“, since Saudi Arabia does not sell oil to the U.S. right now. Oil is fungible. If the a producer stops selling his stock, the price goes up. If he merely refuses to sell to a particular customer, on the other hand, that customer will pay a little more for oil from a less picky producer, while the picky producer will have to settle for a little less money the average price, though will remain unchanged..

    Comment by tarran — May 3, 2008 @ 10:01 am

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