- - Tuesday, October 22, 2013


America’s skyrocketing oil and natural-gas output is not only fueling massive and widespread economic growth, but also producing considerable hot air in policy discussions. Most dangerous are illusions of “energy independence” and “energy leverage” that ignore fundamental economic and political realities of the modern world. Blind pursuit of these twin goals is unlikely to bring the results that some claim and could, in fact, have costly unintended consequences, both at home and abroad.

Domestically, new oil- and gas-extraction technologies are already supporting hundreds of thousands of jobs and could mean more than 2 million jobs in the next 20 years. Over the same time frame, they will likely add more than $1 trillion to the U.S. economy and generate an equivalent amount in federal, state and local tax revenues, according to recent studies. Lower energy prices are also making U.S. manufacturing more competitive and encouraging foreign companies to build and expand factories in America.

Despite this, some longtime conservatives apparently hope to replace the Obama administration’s war on coal with a war on oil, arguing that alternative transportation fuels such as natural gas, ethanol, methanol and electricity can liberate the United States from Middle East energy suppliers. While this line of thinking is understandably appealing, given the high price the nation has paid over decades in seeking to stabilize the Middle East, the rather limited gratitude of many populations there, and the sometimes uncooperative behavior of governments, such an approach could be costly in some unexpected ways.

First, there are reasons that alternative fuels have not already taken over the U.S. transportation sector. Most importantly, they are still inferior to gasoline. You can’t shift a massive market that consumes well over 100 billion gallons of gasoline per year to new fuels quickly even when they are cheaper and better. When they are not obviously cheaper or better, such a transition is impossible without significant government subsidies to move the market — and without the federal government picking winners and losers among the many fuel options. It’s better to let consumers make those decisions.

Second, taking into account oil’s dominant position in the global energy economy — and strong demand reflected in sustained high prices despite significant new U.S. production — it is not realistic to expect that reducing U.S. imports from the Middle East would in any way “punish” exporters, who can easily find new customers. At the same time, since America’s new extraction technologies are expensive in comparison with Middle East production costs, an effort to drive down oil prices or to sharply cut U.S. consumption could damage the economy long before having any major impact on its intended targets. Worse, if we actually succeeded in putting real economic pressure on the Middle East’s top producers, we could destabilize their governments. Watching how Syria’s civil war has evolved and the growing power of extremist forces, this is hardly something Washington should undertake lightly.

Third, and somewhat ironically, dramatically cutting U.S. imports from the Middle East may actually erode Washington’s leverage rather than increase it. As the saying goes, when you owe the bank $1,000, it’s your problem — but when you owe the bank $1 million, it’s their problem. Accelerating the economic decoupling of the United States from Saudi Arabia and other major oil exporters means weakening their stake in cooperative relations across the board. Since China is most likely to absorb any exports no longer destined for America, it also means pushing Beijing and Riyadh together at a faster rate, especially since China’s leaders feel no need to advise the royal family on how to rule their country. How long would Saudi Arabia or others continue to buy U.S. arms and to share intelligence information if top officials thought that the United States was working assiduously to weaken their economies?

This is not an argument against pursuing new energy technologies, which America must do to sustain growth and prosperity in the 21st century. Rather, how we pursue new technologies matters. Market principles should be in the driver’s seat, not the federal government or, for that matter, Congress, which has an increasingly deplorable record of indecisiveness, half-measures and bad choices. The government is best at supporting cutting-edge research — some essential technical components of fracking came about this way — and is much less effective in promoting technologies that are not gaining acceptance in the marketplace on their own.

Over the long run, technological advances such as these make contributions to America far beyond their direct and indirect economic effects. They demonstrate powerfully how and why the United States became — and has remained — a global superpower. At a time when some abroad see a paralyzed government and a foreign policy in retreat, forecasts of America as not only the world’s leading natural-gas producer, but also the top oil producer send a strong contrary message. Now is no time to undermine that success.

Paul J. Saunders is executive director of the Center for the National Interest. He was a senior adviser to the undersecretary for global affairs in the George W. Bush administration.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide