Obviously the significant change in the price of oil affects all sorts of economic variables. Adjustment to meaningful price changes requires all sorts of variable economic changes. But our economy makes them and we go on.
Unfortunately the real issue is not so much the price changes. Imagine sitting down to negotiate with an opposing force that has all the power, whether it be military, contractual or any other form of overwhelming power, versus the party they are negotiating with.
Because of our inability to make significant adjustments to our oil usage we cannot negotiate with the oil suppliers from a position of equality, let alone a position of strength.
We cannot continue to delude ourself into thinking that they need to sell their oil more than we need to buy it. But imagine if the likes of Chavez, Kadhafi, Iraq, Iran or Russia decided to curtail shipments to us (somehow), there would be no Nash Equilibrium or literally any possible response short of catastrophe.
It is absolutely urgent that a great nation not stay in the position of ultra-vulnerability to the fluke of nature that placed oil in very unequal distribution around the world.
It's kind of like smoking, it will get you often enough to force most intelligent people to stop.
The situation with oil can't keep up whether the price is $75 or $175, the underlying weakening of our independence is overriding.
Friday, March 4, 2011
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I agree with your theory that we cannot continue to place ourselves in such a vulnerable position. What I don't understand is why we continue to rely on oil. George W. Bush stated that "we were addicted to oil". I'm not sure this is the case. In fact, I think that most people, given the opportunity, would prefer to not have to rely on foreign oil. I also believe that given the opportunity, most people would not want to explore domestic oil, especially after the Gulf explosion and it's after effects. The problem is, where are our opportunities for alternative sources?
ReplyDeleteWhy can't we put pressure on the automobile industry to build cars that run on vegetable oil or solar powered vehicles that are actually cost-efficient? Please explain the relationship that our US Government has with the Middle east and with US Oil Companies. Why do we continue to fight over this resource when we have other resources that have been proven to work? Does our economy depend on these companies or can we live without them? Where are our opportunities?