What's the threat?

As I was reading a blog today, I was immediately drawn to the blogger's comments regarding Thomas Friedman's ideas. I was especially interested because I am currently reading Friedman's book "The World Is Flat", and have been very impressed by his thoughts and observations thus far into my reading. However, in the blog I read today, the blogger clearly felt different than I did about Friedman. The blogger seems to take issue with Friedman's position that Bush should take more serious measures to become less oil dependent, and more alternative energy efficient. I read the link that was included in the blog and again found Friedman's viewpoints favorable. Friedman has a very valid point. The U.S. needs to shift its priorities, most notably by scratching off foreign oil dependency. The government needs to start being a little more proactive, and innovative. If money is the issue, perhaps simplifiying the tax code, wasteful paperwork, or never ending supply of red tape could help them funnel in some more funds. Besides, what could yield this nation a greater return than new knowledge, and technology in the ever growing energy arena?


Ryan said...

I also think I agree with Friedman. Our dependency on other countries for such an important resource could cause the United States problems in the future. Not only do we depend on many other countries, our relationship with those companies is often questionable. They have the power to control every aspect of our lives with this one resource. This is why I agree that we need to look into alternate fuel sources. I have one concern though. Is it the government’s responsibility to find the alternate fuel sources, or is it the responsibility of business to spend the money in research? I think that much of the responsibility falls on businesses not the government.

Dr. Tufte said...

Friedman's book is not highly thought of by economists who are familiar with it (and their points have seemed sensible to me). On the other hand, I haven't read it, so I won't criticize it further; and I am interested in figuring out what is so appealing about it (other than he has the deep and wide media connections to help market it).

On the issue of energy independence, this is a popular position that does not have sound basis. Worse, it is often pushed by folks who are covering up their bigotry, tribalism or racism with the fancier clothing of energy independence (please note that this is not a statement about my students, but rather something I want them to mull over).

We really need to ask ourselves how we should feel about someone who is asking us to switch to the high price vendor? Further, in the case of oil in the U.S., it is usually the same people who have enacted measures that have pushed up those prices who are trying to encourage us to pay them. It's hard to see how that can be efficient or even beneficial. So they stretch the argument: it's a security issue, or it's an environmental issue, or it's a fairness issue. These are cop-outs. The real issue is control: some people just can't handle the fact that they can't control everything. Why is it that we're worried about Utah's trade deficit on oil with Saudi Arabia, but not Utah's trade deficit on oil with Louisiana? It isn't the oil, and it isn't the deficit, so it must be that in some sense, Louisiana is us and Saudi Arabia is them. There are elements of that that are true, but there are elements that aren't - like, say, that our friends are the ones that sell us stuff more cheaply than our enemies. People like Friedman forget that.

bryce said...

The United States currently lacks control over oil and that is a very scary situation. I feel that up to this point and a for a few more years the U.S. will not need control over oil because as a country we are the #1 consumer of oil so the oil companies are naturally dependant upon us for demand. What is going to happen to the U.S.'s power of demand as China's economy begins to grow and they become more of a powerhouse and a bigger consumer of oil??? When this happens oil companies will no longer be dependant upon the U.S. for demand and as a country we will lose the little control we had over a resource we rely so much upon. To continue to be the #1 nation in the world we need to find ways to reduce our dependency on oil.

Dr. Tufte said...

" The United States currently lacks control over oil and that is a very scary situation."

Q. Precisely when were we ever in control of oil?

Q. Who are we worried about (the biggest import source of U.S. oil is ... Canada)?

Q. A majority of "oil companies" are American, yet a majority of oil is already consumed outside of America - in what sense is there a preferential relationship that we are at risk of losing?

bryce said...

As far as I am aware we have never been in control of oil....I should have used better wording than "currently lacks control."

I was unaware that our #1 import source for oil was Canada. If you could give me a reference for this so I can update my knowledge that would be great. The news media makes it sound like we rely completely on the Middle East for oil imports. Having Canada be our #1 import source of oil is great because of their relationship with us. Does Canada produce their own oil or do they import and then ship it to the U.S.?????

The majority of oil companies are American, but their status in the oil industry must rely upon their relationships with the countries with the oil. As other countries, like China, continue to develop they are more than likely going to invest in oil in order to secure sources of oil for their country. As they do so they will also have to create relationships with the countries with oil and if they have a better relationship than we do with these countries they will get preferential treatment if an oil emergency hits the world.

Dr. Tufte said...

Entering "sources of oil imports" into Google yields this as the top site: http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

Yes, it is hard to get a correct read on this issue from the legacy media.

Yes, Canada does produce its own oil.

No, Canada is not a transshipper of oil. Most oil is not transshipped (imported for the sake of exporting later). However, it is often imported in one form, refined, and then exported as a different good.

I think your last paragraph has some merit. However, China currently has good relations with many parties only because of lack of exposure - totalitarian governments rarely make fast and steady friends.