The Fallacy of Energy Independence

There is a wide-prevailing notion, even among many conservatives, that a great national goal should be energy independence.  Somehow, this is understood to mean that we produce all the energy we need right here in the United States of America.  Or, in other words, that there is never a need to import energy-related fuel (like oil, natural gas, etc.).

There are many problems with this idea.  What about steel, or water, or food?  Surely steel and food are nearly as critical for our survival and economic development as fuel.  Why not become “food independent” or “steel independent?”  This, of course, leads to outright protectionism: an unwillingness to trade with others and insisting instead on higher prices and lower quality. 

This type of protectionism never comes about by the market alone.  The government has to step in and either provide a subsidy (taxpayer money re-routed to a company or industry) or penalize someone from outside the country who tries to sell Americans something (i.e. oil, steel, etc.).  Either one results in consumers paying more for a lower-quality product.  Hence, the problem with a protectionist trade policy.

Another problem with this mentality is that the concern is with national wealth and independence, not individual wealth and independence.  It is true that as individuals, we are to be self-reliant.  But as a nation?

A nation that protects private property rights generates no wealth of its own.  People in that nation are free to become wealthy, to exchange, to economize, and thus become wealthy.  The nation itself consumes wealth through taxation and inflation, but apart from the wealth of individuals, a nation posesses no wealth.  A nation with a policy of “energy independence” must somehow tax individuals to keep and maintain those policies.  Considering the huge costs (tens of billions of dollars a year) associated with subsidies and regulation and research money, how much more money will the government need to take from the taxpayers to ensure an “energy independent” nation?

Third is the looming issue of constitutionality.  Nowhere in the Constitution is energy independence viewed as a legitimate function of any part of the federal government.  Movements utilizing federal government powers toward energy independence are unconstitutional.

Fourth is the flip side of the first reason: what of the countries that would benefit from us purchasing their oil?  Few have sympathy for the Saudi government, but what of an average Saudi who benefits from the trade?  Or the middle-class Brazilian?  Or the poor Nigerian?  By not purchasing their oil voluntarily, we make economic growth and development more difficult for them.  For those who support foreign aid, this makes even less sense: why not just give the money voluntarily by purchasing oil rather than having it confiscated by the government and handed over to their government?

Fifth is the idea that it won’t work.  The U.S. government has tried for decades to work towards energy independence.  It has not worked, and will not work unless the government appropriates much larger amounts of cash, amounts the American people would not support in such a difficult economic time as this.

We should strive to be independent and self-sufficient as families and individuals, as prophets have taught for generations, but to force a nation to be self-sufficient in any area poses large problems that would best be avoided.

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5 Comments

Filed under Austrian Economics, fiscal policy, Libertarian, politics, role of government

5 responses to “The Fallacy of Energy Independence

  1. Energy Independence means that we begin to produce and store enough fuel from the trillions of barrels of oil shale (enough to last 24o years) and put it out on the US market for refining. Thus we remove our 25% drain on the world oil supply, making that oil available for the rest of the world to refine and use. Doing so reduces our dependence, reduces pricing, increases world supply, and strengthens our economy.

    As for the constitution, it is not designed to govern every facet of our life. But the constitution does provide for the common defense, and for us to rely on our enemies to provide our oil supplies leaves us vulnerable, and flies in the face of defense. If our enemy decides that they no longer want to provide us with oil, then what? Our economy comes to a screeching halt, and we are left to their mercy.

    Finally, the idea that it won’t work comes from a defeatist attitude. It won’t work as long as we believe, or are led to believe, it won’t work. The fact is, we have enough coal to liquify to last 250 years, and South Africa has been using German technology developed in the 40’s for 50+ years. It does work, we just have been badgered by fascists who have usurped the environmental cause to believe it won’t, and to stop trying.

    “Drill and Mine US Oil–Buy and Refine US Oil!” (copyright kelly and dorthey knight, 2008)

    I’m a knoyd, and you should be, too!
    http://imaknoyd.wordpress.com

  2. plato04

    Thanks for chiming in.

    If in the first paragraph by “we” you mean Americans acting in a private (non-government) context, then I am in agreement. Private companies and individuals should certainly have more freedom to drill, to explore, to use oil shale, etc. I’m all for it. But when the government gets involved…

    You said, “As for the constitution, it is not designed to govern every facet of our life.” I agree. It is to limit government to only those actions the Founders thought necessary. A collective national energy independence is one of those unnecessary things. If it is essential, then let’s get a Constitutional Amendment, rather than just twist the Constitution to believe whatever we find convenient or personally appropriate.

    You said, “The idea that it won’t work comes from a defeatist attitude.” It could work if the government spent enough money. But the chances of that are thankfully slim. I know it could happen, but it would be problematic. What troubles me is that the rhetoric is so severe that it almost leads me to believe that advocates of “energy independence” would support nationalizing the energy industry if they thought it would help. I won’t support that.

    The point is that liberty and freedom (i.e. the free market) lead to the best energy policy for everyone.

  3. I am a supporter of Energy Security and Independence, but I am absolutely not in favor of nationalizing the industry. The defence industry is not nationalized, it is very much free market, and it is the best there is. There is nothing to say that the energy industry cannot operate in a free market and have a positive affect on our independence and security without government intervention.

    If you read through my blog (http://imaknoyd.wordpress.com) you will get the idea that I am more in favor of government regulation going away, restrictions to drilling and mining being loosened, and the free market being allowed to work the way it was intended.

    By opening Colorado, Utah, and Wyoming to mining of oil shale, and the coal fields across the country to mining for Coal to Liquid Fuel, we can release nearly 500 years of fuel independence and security, and 10 generations of employment.

    My whole purpose is to get congress to recognize the need to “Drill and Mine US Oil–Buy and Refine US Oil!” (copyright kelly and dorthey knight, 2008)

  4. plato04

    Then we are agreed to remove restrictions. No need to have government barriers to growth and development, whether offshore oil, ANWR, coal liquefaction, oil shale reserves, etc. Or for that matter, reduce restrictions on solar energy production, wind energy, hydropower, and nuclear, and let the American entrepreneurs go to work. This is very much the free market approach I support.

    But supposing all of these barriers are removed, and it is still cheaper to import energy (i.e. oil) from Venezuela or OPEC or Nigeria or some other nation? Should the government do something then in the name of “energy independence?”

    I’m hoping we are in agreement when I say that we need to get the government off of the backs of the energy industry: from food crises partly related to ethanol production to huge budgets to wasteful projects to crippling domestic oil production, the federal government does not have a good track record of helping out anyone (except special interests) with respect to energy policy.

  5. imaknoyd

    We are in agreement. In fact, I have decided to do something more than just write about it. On my blog, I am offering to send a t-shirt to one member of congress for every two shirts that are purchased.

    The t-shirt is a symbol for the working man, and it’s time congress gets the message to get to work.

    If you are of a notion, stop by and order at least one shirt and help me, and you, and millions of others put our money where our mouths are, and send the message that we are a knoyd, and we aren’t going to take it anymore.

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