The Oil and Rare Earth Weapon
It is sometimes thought that certain major exporters of important materials such as oils and rare earth metals have what amounts to a “weapon.” It is sad that such language is regularly used. Why, for instance, might Saudi Arabia have an oil “weapon?” Well, the idea is that they have something we want, oil, and by withholding it from us they can torture us.
I find it funny that people worry about this for two reasons:
- For places like Saudi Arabia, with little resources outside of oil, they are more dependent on us oil consumers than we are on them. Seriously. What else is going on in that economy? If we find a substitute for oil, what becomes of all that gooey stuff beneath their sands? If anything, I would argue that the Saudi’s have every incentive to keep us hooked on oil.
- As a side insight here, isn’t it funny how people can hold the view that evil corporations like McDonalds inundate us with advertising to make us consume their products, but that when it comes to worrying about resource weapons such arguments disappear? Aren’t the Saudi’s in exactly the same position as McDonalds? I’d argue they’re in a far more precarious position, since McDonalds has and will continue to be able to adopt to changes in consumer tastes and competitor offerings. Never mind that, that big giant pink elephant in the room is a figment of my imagination.
- Don’t consumers of this oil have just as much of a weapon? I may or may not think that, but the reason I offer it up is to point out another tension in this view. Many activists like to think the power of the consumer is really important in shaping policy and the direction firms go. We see boycotts of all kinds of products, e-mails urging us to shop more consciously and the like. So why is it when it comes to oil we see so little in the way of consumers having a weapon many times deadlier than the producers do? There’s likely a simple answer, but I want to keep these posts short.