Oil Conservation

Fire of Liberty

Arnold Kling has a good article over at Tech Central Station on the idea of increasing energy independence from Saudi Arabia. Kling notes that the US would be on a fool's errand in trying to free itself from Saudi oil. The overall argument on this is that the oil market is like a large pot where all oil sources are combined and are not sectioned off based on national origin. Therefore, the nature of the oil market prevents a reduction in a specific nation's oil supply. To get a 10 to 20 percent cut in Saudi oil you have to take a cut in the overall supply of oil. Secondly, there's nowhere else to go for cheap oil at this time. Saudi is awashed in oil right now and it's competition Iraq hasn't opened or developed the enormous glut of oil under the lands of Mesopotamia.

Kling also notes that several proposed methods of conservation have enormous costs to the economy and the consumer, see below for Kling's observations:

-"The reality is that energy conservation is a feeble tool for foreign policy. Significant conservation could be very costly to our own country. It might have only a small effect on Saudi oil revenue. It is not at all clear that a drop in Saudi oil revenue would bring about favorable changes in their policies toward terrorism."

-"Even a fuel consumption tax would not reduce world demand for oil by as much as it would reduce our own consumption of fuel products. That is because as the price of oil declines, demand will increase in other countries."

-"In my view, the worst policy option of all is to subsidize the use of alternative forms of energy. If other forms of energy are not economical on their own, then taxpayer subsidies are only harmful. The use of subsidized alternative energy does more damage to our own economy than to Saudi Arabia's."

While Kling takes an economic approach to the issue, he recommends that the US should seperate political issues from economic issues. While we can't affect the price of oil coming out of Saudi, we can demand reform on human freedom and a crack-down on terror.