Posted by
Randy Starner on Thursday, September 18, 2008 12:00:00 AM
It appears that we, as a country, may have maxed our credit limit. We have purchased more than we produced for too many years. Trade deficits aren't that dangerous. It makes sense that wealthier entities, be they nations or individuals, purchase more than poor ones. But, our wealth is dependent on our production. We can't buy $14 Trillion in goods, service, government, and bailouts on $13 Trillion in GDP without credit. And, we may be becoming a credit risk. All this, while a $25 Trillion dollar asset lays beneath our feet.
For those that long for a pure green economy, I submit that it will only occur with a robust, growing economy. A poor brown economy will never achieve the goals of the environmentalist movement. The U.S. is voluntarily refusing approximately $500 Billion in annual GDP in a time of financial market crisis. It is time to quit looking at the drill debate as simply an environmental vs energy independence debate. This is an economic growth issue. Most of the oil that we place off limits is on public lands (or waters). This means that it doesn't belong to the oil companies or Jed Clampett. It belongs to tax payers. The state of Alaska processes oil in this manner. The oil companies buy the oil from the state. I ask you, would Jed Clampett refuse to sell his oil, due to environmental concerns? If you discovered crude, while shooting for some food, would you refuse to sell?
The U.S. normally purchases products and services from other countries that can be produced more efficiently by their economies, while producing products and services in our own economy that create the best jobs and wealth. Information, technology, entertainment, aircraft, etc., are examples of highly competitive products produced profitably in the USA. Pants, socks, tennis shoes, etc., are examples of products produced more efficiently overseas. Oil is a product that we purchase from foreign govenments in large part, because we refuse to produce it here at home. We don't refuse to produce it because it is un-profitable to produce it, or because they are better able to produce it over there. We refuse production in the belief that oil that is not produced will never burn. I would submit that the amount of oil that the world will use, will generally match the amount the world wants. Price shocks will slow its usage temporarily. But, the growing economies in the third world will demand oil for a minimum of 50 years, regardless of energy choices in the USA.
Russia is already using oil as a tool of economic blackmail. Iran is protected from serious challenge for fear of losing its oil production. Venezuela is tampering in other nations affairs with impunity. On the other hand, the US is importing 75% of its oil. Our import requirements deepen poverty in our own country, but, it also strengthens the influence of several governments that clearly wish us ill.
Our government should send a clear signal to energy producers that US oil (and Natural Gas) is for sale. The cost of production belongs to the producer. The un-refined oil will be purchased from the U.S. Treasury (read us, as in taxpayers). While I am skeptical regarding Government planning, I'm sure that some of the revenue from this production can be turned toward investment in infrastructure for alternatives. As the US evolves its energy source distribution, more and more of US oil will be exported. GDP would eventually be impacted by 5% or more. The trade deficit would vanish. That is until the US was clearly the more wealthy nation again, and we would use our wealth to buy more from our neighbors than they were capable of buying from us.
Think of it this way. The US could produce $500 Billion in oil product every year for 50 years. The world (somewhere) will buy it. The fact that we held it so long, may actually be a benefit, because, as other countries run out, we will still be producing. We are talking about $25Trillion in un-realized GDP. We are Jed Clampett, but, we would rather live in our country shack than Beverly Hills. You know, that's not a great metaphor. I'd rather live in a country shack than Beverly Hills, but, hopefully, you get my point.
50 years from now, the world will be largely weaned from fossil fuels. The oil beneath our feet will be as valueless as a Confederate greenback. Do we really want to squander this asset?