Feed on

Oil is Oil is Oil

This is in response to a reader who thinks we can eliminate our dependence on evil oil by developing Canadian oil fields:

Dear Editor,

Some of your readers wish to eliminate America ‘s dependence on foreign oil (or at least from evil foreign oil) and propose that to do this the United States should help Canada develop its oil reserves. The belief here is that by purchasing oil from friendly nations (as if “nations” have dispositions), funding for Iran and other enemy nations would dry up.

Sounds great, but unfortunately the simplicity of this proposal is not its virtue. First of all, Canada is already the largest importer of oil to the United States (18% of our imports; with Mexico at #2 at 15% and Saudi Arabia comes in tied for third with Nigeria at 12%). How much does the US import from Iran ? Zero! However, the real reason developing better relationships with Canada will not stop our dependence on foreign oil or reduce funding for Iran and other enemy nations is the simple fact that “oil is oil” – it’s a commodity.

Suppose however that Saudi Arabia is the rogue state we are talking about. Would reducing oil imports by 12% stop all importation of Saudi Oil? No – at best it would reduce Saudi imports to the US by 12%. In fact, if we banned all imports of oil from Saudi Arabia – it would do little harm to the Saudi’s oil revenues. By developing Canadian oil reserves, we would be taking these reserves out of the market in countries that would have been supplied by them. In doing so, the Saudi’s would be able to sell all of the oil that they were selling to us to these other countries – with only a negligible change in their oil revenues. Therefore, even countries like Iran from whom we purchase no oil will not see their oil revenues fall unless all countries stop consuming oil – or if we simply go and take the oil from them.

Similarly while it might sound good to boycott purchases of Citgo oil (it funds the very anti-American and very hostile government of Hugo Chavez in Venezuala) – such actions would do nothing to cut into this despot’s revenue stream. All this would do is cause the companies we switched our business to to run out of non-Venezuala oil more rapidly and would force them to use more Venezualan oil.

In order to reduce our dependence on foreign oil – and therefore cut off all oil funding for rogue states – we’d have to reduce our oil consumption by 100%. There’s a reason the term “silver-bullet” is relegated to folklore.

Leave a Reply