The Idiocy of Energy Independence?

That is the way that John Stossel sees the issue of so called energy independence. Now, Stossel is at heart a Libertarian and he comes at this issue from that perspective.

It's amazing how ideas with no merit become popular merely because they sound good. Most every politician and pundit says "energy independence" is a great idea. Presidents have promised it for 35 years. Wouldn't it be wonderful if we were self-sufficient, protected from high prices, supply disruptions and political machinations?


The hitch is that even if the United States were energy independent, it would be protected from none of those things. To think otherwise is to misunderstand basic economics and the global marketplace.

To be for "energy independence" is to be against trade. But trade makes us as safe. Crop destruction from this summer's floods in the Midwest should remind us of the
folly of depending only on ourselves. Achieving "energy independence" would expose us to unnecessary risks -- such as storms that knock out oil refineries or droughts that create corn -- and ethanol -- shortages.

There is some truth to Stossel's point however in my opinion, it is fallacious for two very important reasons. First, he is right that if we force energy independence by using those resources that aren't plentiful we are in fact not following the principles of free trade. Of course, if Stossel is so demanding of following good economic principles, he should also realize that by being dependent on foreign oil, we are violating another important one, diversification. What would you say about someone that had a million dollars and put all of it into the stock of one company? I would say they aren't very well diversified. The same goes for a country nearly entirely dependent on one source for energy. Of course, it is a myth that will ever be entirely independent of foreign oil. Nor should we ever make a goal that we should be entirely independent of foreign oil. That is impossible and counter productive.



What most people agree is that it is long past time that our energy be more diversified. Oil meets about 40% of our energy needs. There are dozens of potential energy sources and so it is unacceptable that one accounts for 40%. To give our economy the stability that it needs none should be more than 20% tops, if that. We have seen with the recent hike in gas prices what the potential nightmarish economic consequences are of a lack of energy diversification.

Then there is the second point that Stossel ignores, geopolitics. I am all for free trade and if Brazil has lots of sugar then we should try and import sugar from there and export one of our plentiful resources to Brazil.

That's because, unlike oil, sugar is not absolutely vital to sustaining our way of life. If Brazil ever became an enemy, the U.S. could go without the sugar that they would import to us. The same can't be said of oil as an energy source. Our entire way of life is destroyed if countries like Venezuela and Iran ever stopped drilling for oil. We simply can't allow ourselves to be put in such a weak geopolitical position.

So, while Stossel makes some good points, that doesn't mean he makes a good argument. To ignore such vital things as diversification and geopolitics and focus exclusively on free trade is to make a fallacious argument.