Condemnation of foreign oil produces better energy politics than energy policy. In the US, it has become a powerful rallying cry. National politicians from both major parties have invoked the ambition of reducing oil imports often in the push for passage of an omnibus energy bill.
The promise is alluring: freedom from external influence in the vital matters of oil supply and price. It just isn’t realistic.
The US will not meaningfully reduce its dependence on foreign oil anytime soon. When it does so, as it will at some unpredictable time in the future, the process will be evolutionary, compelled by economics, technology, and geology. Until then, simply retarding growth of the import dependency rate would be an impressive achievement and-if policy must be calibrated to imports-a reasonable goal. Accomplishing more would require economic pain most Americans would not wish to endure and should not have to.
Dilemma
This dilemma festers like a sore no one wants to address in the politics of energy. It has two fundamental causes. One of them is a US need for oil that is both great and strongly embedded in national habits and economics. The other is market prominence attained by oil on the strength of distinct form advantages.
The relentless US need for oil limits the scope for reducing imports through conservation beyond the efficiency gains that occur naturally as prices rise and technology advances. And replacing oil in uses that value high energy content relative to volume-especially transportation-is physically challenging and very expensive. No amount of political bluster about addiction to oil and other such nonsense can annul these powerful factors of energy choice. No policy based on wishful thinking can do more than nibble at the margins of overall consumption of oil and oil’s share of the energy market.
So the US imports oil and will continue to import oil at rates likely to grow. Energy policy that ignores these realities is destined to overreach. And the favorite prescriptions of the consequent activism, mandates and subsidies for conservation and alternative energy, inevitably raise costs without steering the US very far from an energy mix in which oil, much of it imported, retains a commanding share.
Conservation and alternative energy are desirable, of course. They’re essential to the economically and geologically driven evolution away from heavy reliance on oil-and therefore away from heavy dependence on oil imports-that can, should, and will in due course occur. Conservation and alternative energy just shouldn’t be forced. Growing reliance on imported oil is not a good reason to violate the principle.
To be sure, dependence on foreign oil is nothing to cheer. To the extent that the US can produce rather than import oil and other energy at competitive cost, it should do so. Domestically produced energy generates wealth. Imported oil is just a purchased commodity. Worry over foreign oil should confine itself to this difference and to the relative implications for national interests. Other purported disadvantages of imported oil-such as exporter instability and potentially nefarious use of the money-need to be kept in perspective with this question: Who hurts most when the US incurs costs to keep from buying oil that will be sold no matter what it does?
Policy errors
A government driven by the desire to cut oil imports is a government likely to make costly errors in energy policy. It’s a government inclined to act without heeding cost, a government inclined to heave public money at uneconomic energy sources able to contribute only marginally to supply, a government eager to encroach on economic choices better left to individuals and markets. US lawmakers who soon will try to reconcile energy bills passed by the House and Senate must resist the temptation to let theirs become this type of government.
The most serious energy hazard faced by the US is not foreign oil. It is the governmental urge to short-circuit economic processes with mandates and subsidies. On the range of energy problems facing the US, the government must assign imported oil the priority it deserves, which is something considerably less than official mechanisms that distort markets and keep the country from producing all the economically sensible energy it can.✦