August 1, 2009

Maybe dependence on foreign oil isn't so bad

MARK MONTGOMERY is Donald L. Wilson Professor of Enterprise and Leadership, Grinnell College. Contact: montgome@


Experts agree that three things we find tedious in the short run turn out to be beneficial in the long run: eating a healthful diet, getting regular exercise and being dependent on foreign oil. OK, maybe not the last one. Almost anyone will tell you that our dependence on foreign oil is a grave danger to national security. Only a nitwit would suggest that world oil markets actually promote peace and stability I hereby volunteer to be that nitwit.

Consider an historical example. All Americans are aware that the Japanese navy attacked Pearl Harbor on Dec. 7, 1941. By implication, the Japanese navy did not attack Pearl Harbor on, say, June 7, or May 7, of that same year. Why does the month matter? Because, attacking the United States much before Dec. 7, 1941, would have been absolute madness for Japan: We supplied four-fifths of her petroleum.

But in July, to protest the occupation of northern Indochina, President Franklin Roosevelt (with good reason) embargoed the sale of oil and other strategic materials to Japan. The attack in December was intended to cripple the U.S. Navy, so Japan could seize the oil fields of the Dutch East Indies, to take by force what it could no longer buy. As the 19century French economist Frederic Bastiat observed, "Where goods cross borders, armies don't." The same seems to apply to oceans; when the oil stopped flowing west across the Pacific, the Japanese navy started coming east.

Now consider the obverse historical example: Rwanda. Like Saudi Arabia or Kuwait, Rwanda produces a rich, brown liquid without which our economy could not function - or at least could not function early in the morning. But there are plenty of other countries that can sell us coffee. We have little national interest in tiny, unfamiliar Rwanda. So in the spring of 1994, when nearly a million Rwandans were hacked to death with machetes, we had no compelling reason to intervene. And we didn't intervene. Is it cynical to doubt that we would have ignored such bloody chaos had it erupted somewhere on the Persian Gulf?

I know what you're thinking: Aren't we in an "oil war" right this minute, a conflict lasting longer than World War II, for heaven's sake? How can one talk about oil and peace in the same breath? Point taken. But remember that the United States invaded Iraq during a United Nations' boycott, when Iraq's petroleum industry was all but shut down. Suppose instead that Iraq had contained billions of dollars worth of U.S.-owned oil equipment generating millions in daily revenue for U.S. oil companies. Would the Bush administration have been so quick to start bombing? Would it have braved howls of protest from one of the few sectors of American society that Dick Cheney and Donald Rumsfeld might actually have listened to? Surely that would have given them pause.

It must seem that someone like me (a nitwit) finds it quite cheery to go the gas station. As I slide my debit card into the gas pump, do I get satisfaction from solidifying a worldwide network of commercial interdependence? No. Watching the "This Sale" meter whirring like a stopwatch, do I rejoice in promoting international peace and stability? Hardly. Just like you, I got deeply irritated when gas prices rise. Like you, I resent subsidizing the Saudi royal family. Like you, I find the appeal of limiting our dependence on foreign oil almost intuitively overpowering. But also overpowering (much of the time) is the appeal of the couch over the treadmill or the appeal of the muffin over the celery stick. But I know which is better for me in the long run. Our thirst for foreign oil may be less awful than we imagine.