The Politics of the Petroleum Economy

As a matter of principle and practice, I believe in Win-Win solutions whenever possible, and that life presents us with a virtually unlimited number of opportunities to break out of “zero-sum” assumptions to create abundance. In fact, this is the magic of American-style capitalism. The economic decisions of millions of individuals throughout our society have for generations created sufficient wealth to ensure an American standard of living that has been the envy of the world. To be sure, oil is not yet a scarce resource, but is becoming more costly to produce, and the politics of petroleum in the world today threatens the very foundation of our national wealth.

Petroleum is a commodity, in fact, a market basket of commodities that has over the years been priced roughly in relation to the cost of production. The reality of petroleum supply is that it is becoming increasingly costly to produce. Although oil is not yet in scarce supply, low cost, domestic sources have in recent decades been replaced by increasingly costly “tertiary recovery methods”, and risky domestic off-shore drilling. For more information on oil recovery methods see Wikipedia (http://en.wikipedia.org/wiki/Extraction_of_petroleum).

Now let’s look at how much oil we are importing, and from where. The top ten oil producers in 2008 were, in order: Saudi Arabia, Russia, United States, Iran, China, Canada, Mexico, United Arab Emirates, Kuwait, and Venezuela. Several of these source countries are less than reliable, subject to political instability, and/or capable of using oil as a political weapon. Two-thirds of oil imported into the United States comes from five countries (in order of most oil imported): Canada, Mexico, Saudi Arabia, Venezuela, and Nigeria. Although from among the world’s top producers this list represents slightly more friendly and reliable sources of imported oil for the United States, we should not allow this to give us a false sense of security.

A protracted war in the Middle East, for example, could create scarcity and have a significant and direct impact on oil supplies and oil prices in the United States, and ultimately on the American economy. Adding to the direct impact, countries such as Japan, Germany, South Korea, France, Italy, Spain, and the Netherlands import more than 90 percent of their oil. And nations like China and India, as well as much of the developing world, are consuming more oil every year. Interruptions in supply from Middle East oil producers could send the global economy into economic free fall. Our Strategic Petroleum Reserve provides little more than short-term protection from interruptions in petroleum supplies, as it amounts to only about 37 days of United States oil consumption, and only 75 -85 days worth of imports.

There is also the unstated cost that the United States has been incurring to secure Middle East oil, namely, the cost of the umbrella of military protection we have been providing to the ruling elites in the Middle East. Our military supports unstable governments such as Saudi Arabia, United Arab Emirates, and Kuwait — all of which would likely fall into the hands of extremists in the absence of support from the United States.

Our economic security and political independence are increasingly at risk. Who will lead us to the energy solutions we need to secure our freedom here in the United States for generations to come?


Jonathan Cykman, EzineArticles.com Basic PLUS Author

About cykman

Jon Cykman works in Washington, DC as a consultant, and is long-time student of American Politics. He started out handing out campaign materials for Hubert Humphrey during the campaign of 1968, and later went on to earn a B.A. in Political Science from the State University of New York, College at Purchase in 1978, and an M.A. in Public Affairs from the University of Texas, Lyndon B. Johnson School of Public Affairs in 1980. Jon retired from Federal Service after 31 years of service, and lives with his family in Catonsville, MD.
This entry was posted in American Politics, Economic Policy and tagged , , , , , , , . Bookmark the permalink.

8 Responses to The Politics of the Petroleum Economy

  1. I really value all of the demanding labor that you’ve put into keeping this blog going for everyone. I truly hope this is online for a really long time.

  2. Thank you for your blog. Much obliged.

  3. I like your post. I have a random question, sorry to be off topic, but I was wondering how do you write to get your site found on Google like I found yours?

  4. Nice to be visiting your blog again, it has been months for me. Well this article that i’ve been waited for so long. We need this article to complete my assignment from the college, plus it has same topic with your article. Thanks, great share.

  5. This really is this kind of a fantastic blog publish and that i concur with every thing.

  6. I would just like to tell you how much I learn from your writtings Dugg it.Hope 2 be back in the near future for some more good articles

  7. Linkuri says:

    Great article. Very interesting information. I use to read about 15 blogs a day, but because my time is nowlimited, I only can read 1 or 2 now. And this is one of them. Radio

Leave a Reply