AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (18 comments)

  1. morganovich

    i have never bought into this “energy is different” argument.

    i suspect most of us agree that self sufficiency in cars, televisions, or clothing is a silly goal.

    we do not even try to do this for food.

    the benefits of trade are enormous.

    so why is energy different from every other good?

    1. Benjamin Cole

      I hate it when I agree with Morgan, but…
      Right. Why are huge deficits in goods and services lionized by Dr. Perry, but now “energy independence” gets a pat on the rump?

      1. morganovich

        i find it equally disconcerting, especially after agreeing with you about homeland security and airplanes.

        twice in one day is making me a little woozy.

        1. Jon Murphy

          At the risk of putting words in Dr. Perry’s mouth, I don’t think he’d disagree with either of you.

          Rather, I think he’d say since so much of our foreign and domestic policy is based upon energy independence, focus can now be shifted to other things.

          1. morganovich

            jon-

            sort of.

            while US foreign policy certainly has a serious oil focus, it’s also a global commodity and price surges caused by supply disruptions anywhere affect everyone, so i’m not so sure about the implications there.

            alas, our domestic policy seems to be focused on destroying, not creating energy independence.

            production on federal land has dropped, coal is under severe fire, nuclear is tied up in regulatory red tape, and all the money is flowing to things like wind and solar that are not currently competitive and may never be (particularly wind).

    2. givemefreedom

      Morg,

      On a purely economic basis, energy is not different than other goods.

      However energy does have a different history than most other goods. If OPEC was instead OFEC (food exporting cartel) and they had a commanding postion in the world food exporting market that the US was dependent on to feed our citizens, then we would likely have a food self sufficency focus instead.

      Ultimately we should be focused on production of goods/services/commodities. The more we produce, the more wealth we create, the better our standard of living.

      1. givemefreedom

        Of course I meant focus on production within a free market environment I might add :)

        1. morganovich

          i agree that producing more goods is good.

          that seems self evident.

          but to ignore comparative advantage is questionable.

          we import a lot of oil from canada and mexico.

          those are relatively safe and we could likely get more from them at need.

          while opec embargoes are possible, they seem far less likely than in the past and less likely to be successful and as fracking gains traction in the rest of the world, opec may be less and less relevant.

          it’s been what, 40 years since anyone threatened to shut off oil sales to the US?

        2. GMF

          f course I meant focus on production within a free market environment I might add.

          Whew! That’s better. :)

          It would seem that OPEC has been more of a bogeyman than a reality. Even during the oil embargo of 1973 it is almost certain that the imposition of price and allocation controls caused more disruption than the decrease in supply.

          Apparently just the threat is enough to have the desired effect.

          Over the years it has proved hard for OPEC members to sustain reductions in output as they depend heavily on the income from oil exports. It might be said “they need us more than we need them”.

      2. I agree that energy self-sufficiency by itself is not necessarily a desirable goal. Although there are energy security issues that are important, and the fact that we have historically relied on many unfriendly sources for our oil – Venezuela, Saudi Arabia, from some potentially unstable parts of the world; and from an oil cartel – OPEC.

        What is positive about producing 84.5% of our energy needs in 2013 is the fact that it reflects America’s shale revolution, which is the most positive energy/economic success story of at least the last several generations.

      3. GMF

        If OPEC was instead OFEC (food exporting cartel)

        An interesting thought. It seems likely that in the event of a food embargo by OFEC it wouldn’t be the relatively rich people living the US who would suffer the most, as they could adjust to higher prices, but the very poorest people in the world who would be outbid for available food supplies.

        I’m also sure our wise leaders could soften the blow of food scarcity with rationing and price controls, which have worked so well in the past. (/sarc)

    3. hitssquad

      @morganovich

      > why is energy different from every other good?

      Energy is the Master Resource.

      > we do not even try to do this for food.

      Food isn’t the Master Resource.

      1. givemefreedom

        Hitsquad: Food isn’t the Master Resource.

        It isn’t, until you haven’t eaten for a few days, then food trumps all. :)

        1. The reason food is important is because it’s a source of energy.

  2. I think you all miss the point about energy independence. It isn’t about oil being different – it is about this:

    Every president since at least Nixon has gone on about how we need to be energy in depended and to some extent or other has implemented expensive government programs to try to fix the problem. All of these government programs have been collosal failures – all of them.

    What Perry is pointing out is that free market business and a little ingenuity in the private sector has accomplished in 8 years what politicians have not been able to accomplish in 45 – increasing the amount of energy produced to create a defacto “energy independence” which the government has yearned for.

    Basically it is a case of private industry beating out the government yet again.

    1. Thanks, that’s excellent.

  3. The 84.5% could be close to 100% if any one of the following were taken more seriously by the idjits in office :

    i) the displacement of oil with Natgas was encouraged more swiftly.
    ii) California’s Monterrey Shale was being tapped.
    iii) We help Canada and Mexico accelerate their own shale energy, so that our continent is a net exporter, and that the US only imports from these two neighbors (and very little of that, at that)….

    1. Also if we stopped bagging on coal – currently, we have protests shutting coal exports, governments not allowing new connections to coal mines, government sponsored hectoring energy companies that have the temerity to want to open a coal powered plant.

      Also if the government allowed new leases on federal lands which have been pretty much shut down. Open the Gulf again for exploration – increase the permits 3 fold to the same level when Obama took office.

      It looks like true energy independence will take about 8 more years. Stop the government silliness and we will have it in 4.

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