Green Car Congress

First, is oil a finite resource? Theoretically yes, but from a practical point of view known reserves are actually INCREASING not diminishing. We are discovering new sources of oil all the time and we are coming up with more efficient ways to extract oil all the time. So from a practical point of view, the scarcity problem isn't as scary as it sounds on paper. Note that the of gas today is actually, when adjusted for inflation, lower than many points in the last few decades, and is well below its peak in the early '80s.

But to the core point: is oil dependence a SECURITY issue? I don't see it. I believe that instead it is an ECONOMIC issue and should be treated as such. It is certainly true that we are economically vulnerable to the whims as such players as OPEC and Hugo Chavez. But are we at a security risk? I suppose the case could be made that these characters could use economic blackmail against the US--and certainly policy towards Saudi Arabia is greatly influenced by their influence on the oil supply. But this is at its core an economic issue. It is economic risk.

How much we as a society want to hedge this risk is a worthy subject for national discussion, but it seems a bit odd to me to suggest that imposing near term costs on the US, such as with fuel efficiency standards or gas taxes, is an obviously beneficial solution to possible future risk. In other words, how do we want to spend our money? We can spend it up front trying to curb our dependence on oil or we can not spend it and have a stronger economy which will be better able to withstand potential economic turmoil on the international political front. Iraq was (and IS) a MAJOR source of oil but the world managed to survive the disruption of the Iraq war--from an economic POV.

I am very wary of the state imposing costs on our society--such as with CAFE standards or gas taxes--as a forced insurance policy. There is a built in warning system that will signal if oil is becoming scarce--it's called the price. That price factors in not only the availability of oil right now but the risk of its availability in the future.

Without any central planning industry and entrepreneurs everywhere respond when a price signals problems with solutions--often with solutions that lead to a better system than existed before the problem existed. So this is not an argument AGAINST "sustainable" strategies, it is an argument in favor of it. There is a market right now to create better fuel efficient cars and to come up with better price/performance energy. There always is. How strong that market is corresponds to how big the problem is.

Now some may argue that the US government knows better than the market what the risks to the future supply of oil will be--and I suppose it is possible that they know something we don't. But that's what we have strategic reserves for. And let's face facts: we are HEAVILY dependent on oil. We have virtually NO renewable energy infrastructure--I believe the number is less than 5% of total energy is renewable (non-fossil fuel, non-nuclear) and most of that is hydro. Oil is a global market, so we will NEVER be able to insulate ourselves from the vicissitudes of the global market place. Cutting the US off from that marketplace is an absurdity. If we really want ECONOMIC security IN THE SHORT TERM the solution isn’t imposing new costs or new technologies but reducing costs where able. Hacking away at the countless taxes and regulations that even John Kerry acknowledges increases the cost of gas would be a great start.

In the long run, entrepreneurial innovation, motivated by profit (dare I say it!) not bureaucratic or political fiat, will move us beyond the Oil Age—I am sure of it and I can’t wait for it to happen. The Stone Age didn’t end because we ran out of stones—it ended because we figured out better tools than stones.

CODA: Some argue that reducing our dependence on oil is a security issue because oil revenue in the Middle East enables tyrannical governments. Sadly true, and I think there are big problems with regimes propped up by natural resources. Ironically, many countries rich in natural resources are some of the poorest, are getting poorer, and/or have intolerable gaps between wealthy elites and the masses (think Middle East, Africa). This is because often rulers who can gain wealth from natural resources don’t need to tax their citizenry—and so don’t undertake the needed steps to create a tax base, which is essentially creating a middle class and the freedoms needed to make it thrive. But it doesn’t follow that devastating the oil market would therefore be a good thing. In other words, let’s suppose we COULD achieve oil independence overnight: Would more poverty in the Middle East really help our national security situation? I don’t see how economic collapse in these nations is really in the national security interest of the US. They will be forced, eventually, to reckon with a world weaning itself from oil in good time, but a gradual move here may provide the best transition.