So close, yet so far. A third columnist begins to see the light on US oil consumption. First there was
Thomas Friedman, and more recently
Max Boot.
Now, from the Washington Post, columnist Robert J. Samuelson, gets it mostly right:
Higher oil demand has now strained the global production system to its limits. Spare capacity of about 1.5 million barrels a day is the lowest in 30 years, said CSIS's Frank Verrastro. Most is located in Saudi Arabia. Higher prices partly reflect fear of more supply disruptions -- from terrorism, war, political upheavals, weather or accidents. In theory, higher prices should be partially self-correcting. They should dampen demand and encourage supply. But theory must always be revised for new realities. Here, there are two.
One is that in rich countries -- notably the United States -- rising incomes make it easier to afford higher energy prices. In the latest month, American oil demand was actually up 2 percent from a year earlier (and, yes, adjusted for inflation, today's gasoline prices are still roughly a third below levels reached in 1980 and 1981). A second reality is that big oil companies seem less willing or able to find new oil.
Referring, as ever to the most basic of economic verities:
Perhaps the most basic of economic ideas is that of supply and demand, that is: if supply is greater than demand, prices go down, if supply is less than demand, prices go up.
A corollary: If supply is fixed, but demand rises, prices go up.
Which is the current situation.
And, as I said Samuelson almost gets it:
The message for Americans is simple. We import nearly 60 percent of our oil. We can't eliminate imports any time soon, but we could limit them by producing more at home and conserving more (meaning higher fuel taxes, tougher gasoline standards, smaller vehicles and more hybrid engines). That would lessen our own vulnerability and ease pressures for the rest of the world. The debate that pits greater production against greater conservation is wrong. We need both.
Damn, the man gets that we need to urgently conserve, but insists on falling into the fallacy that increasing US production will make us less dependent on foreign oil supplies, and therefore (and here's the lie) more secure.
Increased domestic production will not make the US more secure.
Until such a time as the US can go entirely without oil imports its reserves will remain part of the global domestic market. Since tapping US oil reserves (including those in the Alaskan Wildlife refuge) can only address a tiny fraction of US consumption, increased domestic oil production will have only the most marginal effect on US vulnerability to radical changes in oil prices.
The only ones to gain from an increase in domestic production will be domestic oil corporations. Domestic production doesn't lessen our dependence on this dwindling resource, neither does it reduce the cost to the consumer, it only lines the pockets of oil execs and shareholders. That's it. As with the majority of Republican policies the result is the same: corporations win, you lose.
The only effective means of securing the US economy against the whims of the oil potentates is by reducing consumption, and therefore dependence on oil. That's the bottom line. Seeking to ameliorate the situation by adding fractional increases to global oil reserves only serves to mask the problem,
not fix it.