Oil Dependency Is Hazardous to America’s Future

By admin ~ May 25th, 2010 @ 1:43 am

When the “5+1” Working Group (Britain, France, Germany, Russia, China, and the United States) unveiled its package of incentives and penalties to bring an end to Iran’s nuclear enrichment and reprocessing activities, one penalty was notably absent: restrictions on Iran’s ability to sell oil in the world marketplace. Yet, that is about the only penalty that would inflict meaningful pain on Iran’s economy and government. The latest data from the U.S. Energy Information Agency shows that oil sales account for 80%-90% of Iran’s export revenue. Oil revenue also finances 40%-50% of Iran’s federal budget.

The absence of such “teeth” is not accidental. Instead, it illuminates the United States’ and its allies’ Achilles heel. A combination of dependency on oil and lack of alternatives have constrained their foreign policy capabilities. Foreign policy is employed to protect a nation’s critical interests, pursue its opportunities, and address the threats that confront it. Foreign policy is enabled by a nation’s strengths and constrained by its weaknesses. Weaknesses can, if they are important enough, imperil a nation’s ability to achieve its foreign policy objectives. The lack of a decisive penalty in the Iran proposal makes this reality all too clear.

The United States can ill afford to ignore its oil-related vulnerability. The nation urgently needs a credible energy policy with the ambitious objective of ending American dependence on oil within the next decade. The centerpiece of any credible energy policy should be a crash initiative to supplant oil as America’s preeminent source of energy. Otherwise, American companies and consumers will remain vulnerable to developments affecting oil and American foreign policy will increasingly be constrained by the hazardous geopolitics of oil.

The current price of gasoline, now running consistently above $3.00/gallon in many parts of the United States, is merely a hint of even harsher conditions that could result from a number of reasonably likely scenarios. Robust economic growth in Asia, particularly China and India, could lead to a chronic imbalance in the oil markets in which the quantity of oil demanded already often exceeds the quantity produced. The possibility that the quantity demanded might sometimes exceed overall productive capacity would not be too far-fetched.

If ongoing economic development in Asia doesn’t lead to demand imbalances, growing Iranian power could. Iran is arguably bent on developing nuclear weapons. Given its geographic location and the reach of its existing missiles, Iran is already in a position to decimate the Persian Gulf’s oil facilities and shipping, should the international community employ military force to curb its pursuit of nuclear weapons. Iranian President Mahmoud Ahmadinejad’s repeated threats to destroy Israel, his frequent denials of the Holocaust, and his belief that a world without the United States is possible, make the situation there highly dangerous. Despite all its risks and costs, military action against Iran might well prove unavoidable in the future.

Even if Iran’s nuclear ambitions are thwarted through diplomacy–a path that is still as feasible as it is desirable–Islamist terrorists could increasingly target the oil supply. Such a strategic approach would give Islamist terrorists the tremendous capacity to damage the world’s economies that individual terrorist strikes across the globe, barring those with weapons of mass destruction, cannot hope to achieve. An oil-focused strategy by Islamist terrorists would greatly increase the costs and difficulties of defeating expansionist Islamist totalitarianism. Should such developments shatter international resolve against Islamist terrorism, the prospects for victory in this vital endeavor would be diminished and the future rendered far bleaker.

Under any or all of these scenarios, the world’s economies will be the “shock absorbers” for resulting oil production shortfalls or disruptions. The oil price would rise to such an extent that inflation would increase and economic growth would be strangled. The world could then witness a return of 1970s-style stagflation (high inflation coupled with high unemployment). Improvements in the standard of living in both developing and developed countries could slow or even cease altogether.
Oil dependency also entails major geopolitical costs for the United States. Oil has contributed greatly to Middle East authoritarianism and the recent spread of oil-based authoritarianism in other parts of the globe. Princeton University Professor of Near East Studies, Bernard Lewis explained, “oil is the Arabs’ disaster, because it enabled governments to accumulate enormous wealth which strengthens their political and military power and destroys democracy and freedom in the bud.” New York Times syndicated columnist and author Thomas Friedman observed that on account of high oil prices, “the seemingly unstoppable wave of free markets and free peoples that we thought was unleashed by the fall of the Berlin Wall is now being stymied by a counterwave of petrol-authoritarian states–like Iran, Venezuela, Russia, Nigeria and Sudan–which now have more petro-dollars than ever to do the worst things for the longest time.”

America can break its dependence on oil. In the past, America’s leaders strove boldly to shape the nation’s future. In June 1942, President Roosevelt launched the Manhattan Project with the aim of developing an atomic bomb before Nazi Germany could. In September 1962, President Kennedy made it America’s mission to land men on the Moon. In June 1982, President Reagan launched his plan to “leave Marxism-Leninism on the ash heap of history.” All of these projects succeeded spectacularly. All were achieved in less than a decade.

Today, the issue isn’t whether America can free itself from its current dependence on oil. It can. The United States has the financial resources, technological tools, and intellectual capital to make this future possible. It has a rich tradition of achieving breakthroughs of similar magnitude in the past. The only real issue is whether America has the bold leaders who will work to forge that future at a time when the nation’s vital economic and geopolitical interests increasingly demand just such a solution.
About the Author: wahm

RSSSubscribe to blog feed.

Comments are closed.

Leave a Reply

©2007-2020 Coupon Addict