R-Squared Energy Blog

Pure Energy

American Freedom from Oil: A Bipartisan Pipedream

The following guest essay is by Kevin Kane. Kevin is a market analyst, economist, Asia political affairs strategist, and Korean language linguist living in Seoul, South Korea.

American Freedom from Oil: A Bipartisan Pipedream

By Kevin Kane

During election campaigns, presidential candidates, policy leaders, and pundits pander to both American fears and desires when they demand that the U.S. should pursue “energy independence” by eliminating oil imports. This has been a rallying cry of every President since the 1970s when American domestic production began a steady decline that continues through today.

Is energy independence a realistic policy, or as we are a part of one globally integrated economy, do we need a more relevant global energy strategy that captures the inherent economic and financial vulnerabilities associated with our age of irreversible interdependence?

Perhaps we need to look outside our domestic tunnel vision and broaden our perspectives on energy security. Seeing the bigger globalization picture will require leaders, starting with President Obama, to refocus the world’s perspective on energy from the zero-sum national to positive-sum international level. Essentially, the world needs a global energy strategy.

Global Energy Security

If leaders are serious about energy independence, they will ask the more appropriate energy question, “How can we create global energy security?”

When asking this more relevant question, we can derive many proposals, beginning, but not limited to, the following three general approaches:

(1) First, recognizing that global economic integration creates mutual energy insecurity, President Obama could propose addressing the topic through the G20, and call for the creation of a global energy security committee tasked to draft a global energy strategy proposal.

(2) Second, this global energy strategy should focus on building cooperation, creating transparency, eliminating barriers to foreign energy investment, eliminating energy trade-related tariffs, advancing liberalization, coordinating R&D, facilitating technology sharing, and managing mutual energy insecurity.

(3) Third and finally, we have to cease “framing” energy security as a national goal, and rephrase our terminology to reflect our mutual international energy insecurity.

Our Oil Interdependence

American leaders, and the proposals of many environmental, renewable energy, and oil company lobbyists, individually or collectively, are incapable of “freeing the U.S. from foreign oil.” While the U.S. may benefit from reducing oil imports and increasing investments in offshore drilling, energy efficiency, and oil substitute technology, we must recognize that these efforts do nothing to free the American economy from oil’s transnational social, economic, and financial linkages.

If one globalization-connected country’s economy were to experience a supply shortage or an industry-crippling price shock, seemingly distant and unrelated, but economically integrated, countries will feel the effects of these shocks in their own trade and financial sectors. Thus, in an era of globalization, nations connected to the global economy are mutually vulnerable to the effects of oil price and supply shocks regardless of their independent national energy strategies.

Consider how America’s subprime mortgage crisis rippled through seemingly unrelated economies across the entire globe, from South Korea to Russia. We should expect the same economic-linkages to spread the effects of an oil supply or price shock to seemingly energy-independent economies.

American policy leaders need to recognize that eliminating oil imports will not create energy independence.

Leader of the Energy World

As the tip of the globalization spear, American leaders need to think much bigger about how the U.S. will achieve energy security in a world where one nation’s energy insecurity is another seemingly unrelated nation’s economic vulnerability. American leaders have to recognize that the U.S. is only as energy secure as the world’s least energy-secure globalization-connected economy, which includes nearly every developed and developing country in the world. Americans pride themselves on being the leaders of the free world. Perhaps it is about time to lead the world towards universal energy security.

Biography

Kevin Kane is a market analyst, economist, Asia political affairs strategist, and Korean language linguist living in Seoul, South Korea. Kevin holds a BA in political science from Georgia State University and a Master of International Studies with a concentration in international trade and economics from Seoul National University.

Kevin has seven years of military experience serving in Asia and the U.S. as a leader in project management and government affairs, two years of intensive academic study in energy economics and the oil and gas industry, and three years of cumulative internship, fellowship, and consultant experience working alongside Asia policy strategists and fortune 100 business advisors. More details can be found in his resume here.

Advertisements

December 19, 2009 - Posted by | energy independence, energy security, globalization, guest post

36 Comments

  1. "American leaders have to recognize that the U.S. is only as energy secure as the world’s least energy-secure globalization-connected economy"We are the world. Let's all have a coke and sing Kumbaya. Biggest bunch of tripe I've ever read. For one thing,the "world’s least energy-secure globalization-connected economy"…Japan,has a trade surplus. The US operates a massive trade deficit,which continually undermines the dollar…..leading to ever larger trade deficits. That trend will continue until the US is bankrupt if we don't lessen our dependence on crude imports. I'm sure this clown will feel our pain when that happens….from Korea or Singapore,no doubt.

    Comment by Maury | December 19, 2009

  2. Trade Deficit Expands on Oil ImportsFifth month of growing exports overwhelmed by surge in oil shipments Rebounding exports couldn’t keep up with the price of imported oil as the U.S. trade deficit widened in September with the biggest jump in more than 10 years. http://www.joc.com/node/414648

    Comment by Maury | December 19, 2009

  3. Excellent post! No one lives in isolation today and as pointed out the sub-prime problem even hit countries where the banks had no exposure.What is bankrupting the US is gross over spending on everyones favorite item. The economic stimulus package was totally misused and directed toward the Democratic parties favorite charities. China did much better at that by getting the funds out there doing something rather than stuck in the hands of the bureaucrats.

    Comment by Russ | December 19, 2009

  4. Let me ask you something Russ. If you give everything you make to your neighbor,how long will it be before he doubles his wealth and you're out on the street? That's exactly what the US is doing. In '08,our economy grew by $300 billion and we gave twice that amount to other countries by way of the trade deficit. This year,our economy shrank,and we still gave $300 billion to other countries….thanks to imported oil. We are the world crapola doesn't work in the real world. When we're wiping our butts with the US dollar,these other countries won't send us oil out of the goodness of their hearts.

    Comment by Maury | December 19, 2009

  5. If, as Maury, says that USA is a world leader then we must be strong and free of imported oil. Without the USA as a strong market how does your model of robust international trade continue? "We are the world is great for soda ads" but it seems to faltering with American taxpayers and even American voters. No, they are not the same group.

    Comment by Anonymous | December 19, 2009

  6. To put it another way,there are 150 countries with less wealth than we'll transfer out of the US this year alone. Our annual trade deficit is larger than the GDP of Venezuela. Of Denmark,South Africa,or Greece. US Oil imports are responsible for the largest transfer of wealth in the history of the world. That doesn't give me a warm and fuzzy feeling.

    Comment by Maury | December 19, 2009

  7. Have to agree with Maury — on the "tripe" thing.Is there any Politically Correct buzz-word that the author left out?The challenge here is that choices need to be made. If the US wants (desperately needs?) to reduce its trade deficit, can we continue with unrestrained free trade? If the US needs to reduce oil imports, can we afford to continue to let environmental extremists block the effective use of nuclear power?Choics. Either we make them, or others will make them for us.

    Comment by Kinuachdrach | December 19, 2009

  8. Have to agree with Maury — on the "tripe" thing.Is there any Politically Correct buzz-word that the author left out?The author here is young, and this is his first piece. I would request that we make some constructive criticisms.My view used to be that the solutions to some of our more pressing problems would require a high level of international cooperation. And there are some successes there, like the big drop in the manufacture and use of CFCs. But when the economic stakes are high – and different – for different countries, I don't have much hope that we can get on the same page. The chaos at the climate talks is a perfect example of that, but things were much as I expected them to be.RR

    Comment by Robert Rapier | December 19, 2009

  9. Hi Maury – İ believe you read a different post than İ did – and İ went back to re-read it.Nothing is said about giving anything to anyone. The post does say 'Perhaps it is about time to lead the world towards universal energy security.'İt says markets are so interconnected today that the mess of one becomes the mess of all. Not true?

    Comment by Russ | December 19, 2009

  10. I think it's obvious the US has to Lead. An example is ethanol. The U.S. accounts for about 1/2 of biofuels production, Brazil about 1/4, and the rest of the World is coming on. They are 1/4, and the Fastest Growing segment. Don't get me wrong, there are other leaders as well. Europe with their work on small, advanced diesels, Asia on fuel efficient engines in general. A lot of the work on lithium ion batteries is being done in Japan (although for the American market.)Toyota drove the hybrid through the Prius.BUT, we Are the largest market, and we Are important. We have to be a leader.

    Comment by rufus | December 19, 2009

  11. This is a sincere well-written piece, but the fact remains the bulk of the world's oil is controlled by thug states. There are no property rights, contact law, transparency, free press, democracy, human rights etc etc etc in nearly any oil exporting nation.Meanwhile, simple corruption and bungling are rampant in oil thug states. Even war and violence is the norm in Iraq, Iran and getting so in Mexico.That means at any point the USA could see another oil shock, or be subject to blackmail of sorts. Suppose Islamic extremists do topple the Saudi Arabian throne? Or Iraq sinks into rubble? We have seen Venezuela nearly commit hari-kari under Chavez. Mexico eats oil money rather than reinvesting to keep up production. It is really hopeless–some contend that oil riches enfeeble a society. I think that may be true. I don't want to invade anybody, fight anywhere. I would like to cooperate with everybody. But the reality is we cannot trust the oil thug states. They are not democracies with a free press and extensive system of human and property rights. They are thug states. We have the means to radically reduce our dependence on foreign oil while raising US living standards and cleaning up the air. It is called CNG or PHEV. Save a few hundred billion a year in imports, put lots of Americans to work in a new CNG business, and clean the air. What is not to like?

    Comment by Benny "Boom, No Doom" Cole | December 19, 2009

  12. The argument presumes that nation states can provide more consistent policy than can multinational corporate interests. Copenhagen, anyone?And even when Hollywood imagines such unity of purpose ("2012"), the only thing they get right is that the result of unity is really, really bad design and engineering.

    Comment by Rate Crimes | December 19, 2009

  13. "I would request that we make some constructive criticisms."RR — I can't speak for Maury, but I thought his use of the word "tripe" WAS constructive criticism.If the author is young, it may explain some things. He has been educated in a system that has been seriously damaged by Political Correctness. Every student is on the Honor Role. Outside the cloisters of Political Correctness, it is a tougher world. No matter how many degrees we may have, most of us get our real education in the School of Hard Knocks.The constructive advice to our author would be — follow the RR dictum: Start with the Facts. Don't have any? Then do the work to get some! Follow that by thinking about the implications of those facts. Express your proposal for dealing with the facts & their implications clearly & concisely. Then when you are finished, look over your own work with a critical eye before you send it to the publisher. Ask yourself — Is this a real contribution, or is it tripe?

    Comment by Kinuachdrach | December 19, 2009

  14. I would recommend that the author research footprint analysis and see if the "American way of life" can be extended to several billions of people.And how secure do we Americans feel today in our way of life?

    Comment by Rate Crimes | December 19, 2009

  15. As I review my own comments here, I realize that I am sounding as old and crotchety as the rest of the grumps who comment on this blog. Keep it up kid! You only have a few years before your eyes begin to dim like ours.

    Comment by Rate Crimes | December 19, 2009

  16. Perhaps some of the pontificators would care to direct us to examples of their writings? Too often, your profiles lead to nothing.

    Comment by Rate Crimes | December 19, 2009

  17. Maybe the US should start considering alternative sources of energy more. Renewable sources, like wind power or solar energy are both, low cost and environmental friendly. And they also offer independence from other countries.

    Comment by Low Cost Energy | December 19, 2009

  18. "Renewable sources, like wind power or solar energy are both, low cost and environmental friendly."Low Cost — that is a good example of someone not doing the spadework before commenting. Everyone knows that wind factories and solar installations have to be subsidized in a variety of ways — direct subsidies, tax write-offs, preferential pricing, mandates, even voluntary higher consumer prices. If these sources are "low cost", then why the need for subsidies?Also, everyone with eyes in his head knows that wind turbines (aka bird whackers) are not easy on the environment. Manufacturing solar cells takes a lot of uncommon mined minerals and uses intense chemicals along with a lot of water — not exactly environmentally friendly.So if you are going to claim something (low cost, environmentally friendly) which is on its face ridiculous, you had better put in a bunch of facts to back it up. Otherwise, you are guilty of writing "tripe".And if focusing on facts is "crotchety", then let's all look forward to the day there is a Nobel Prize for crotchetyness.

    Comment by Kinuachdrach | December 19, 2009

  19. Low Cost Energy, While many here will generally support your proposal, you should not confuse the generation of electricity with the liquid fuels we use primarily for independent mobility.Community gardens and shutting fast food destinations would do more to reduce our dependence on foreign fuels than will solar and wind. I say this as a vocal advocate for the rapid adoption of solar energy in our sunniest regions.

    Comment by Rate Crimes | December 19, 2009

  20. Oh, and "Low Cost Energy", you can ignore, "Kinuachdrach". He's short on facts.

    Comment by Rate Crimes | December 19, 2009

  21. I'm with the other Russ. Excellent article.I hope it spurs "journalists" to steal his idea to generate more articles in this vein in the mainstream farce, er, I mean "press."

    Comment by Russ Finley | December 19, 2009

  22. Rate Crimes — instead of just sounding petulant, why not show Low Cost how it should be done?You know, lay out the facts that prove that wind factories provide low cost energy, without subsidies. Then, when you have done that, you could lay out the facts about the issue of intermittency and explain its impacts on delivered costs.You have a great opportunity here to win people over, Rate Crimes. Hell, if you can prove to me that I should trust you rather than my own lying eyes, I will join your side.

    Comment by Kinuachdrach | December 20, 2009

  23. "Is energy independence a realistic policy, or as we are a part of one globally integrated economy, do we need a more relevant global energy strategy that captures the inherent economic and financial vulnerabilities associated with our age of irreversible interdependence?"It seems to me the article didn't attempt to answer its own question. *IS* energy independence a realistic policy? If it is, then wouldn't it make sense to pursue it? Even if you you would still subject to knocks from other energy-dependent economies, surely energy independence — if possible — is better than some mutually assured meltdown. I think its the option I'd pick if I had a choice. Just like I benefit from mutual security by taking out car insurance, but I still think my best option is to avoid having a crash if possible.

    Comment by PeteS | December 20, 2009

  24. Pete S said, "I still think my best option is to avoid having a crash if possible."Perhaps the best option is a gradual, gentle energy descent. For how else can we look forward to a renaissance?

    Comment by Rate Crimes | December 20, 2009

  25. Kinuachdrach said…"Rate Crimes — instead of just sounding petulant, why not show Low Cost how it should be done?""Petulant"? I thought I was simply stating the obvious fact of your paucity of knowledge and wit.Methink thou doth protest too much! You misinterpret my perspective through the projection of your own petulance.If you would do your homework, and be more than an R-Squared parasite, you would realize that I've done the work you suggest. Or, are you so busy developing your own analyses and courageously publishing your own independent work elsewhere that you have too little spare time to do that homework?A man is measured by the quality of both his friends and his enemies. I have plenty of quality in both categories. I await an exposition of your quality before I become concerned about classifying you as either one or the other.

    Comment by Rate Crimes | December 20, 2009

  26. Kinuachdrach – Your time of the month? You are blowing smoke in all directions while accusing others of doing so. As far as enemies İ can believe you have plenty. Parasite – İ guess you are making a self description?Anyone paying attention in life has learned by an early age (if he is intelligent enough) that there are normally many solutions to any problem and not just his own.Bird whackers? İ had thought that nonsense from greens was dispelled long back. Modern turbines move a bit slow to whack much of anything! İs energy independence possible? İ suppose so but it wouldn't isolate one country from a meltdown in others. How many times in recent years has the problem of a country or area spilled over onto the world at large? Numerous – be it oil, illness or political!

    Comment by Russ | December 20, 2009

  27. >>> Bird whackers? İ had thought that nonsense from greens was dispelled long back. Modern turbines move a bit slow to whack much of anything! <<<Perhaps you need a 7th-grade geometry refresher; a 300ft diameter turbine turning at a "slow" 20rpm will have blade tips moving at over 214mph, with one blade passing every second. There's no free lunch.

    Comment by Anonymous | December 20, 2009

  28. Maury,I will have to either conclude you are in unwilling of supplying substance or you lack the sophistication to understand the complexity of financial integration. I will presume you are not much of a finance expert or an avid Macroeconomic reader, and thus fall onto the latter explanation. Interestingly, you stated "we are the world." Am I to presume you are taking ownership for something you do not own: The U.S.? Kinuachdrach and Maury, and any other person ready to make a half-hearted post, many of you are thinking in terms of U.S. and China, but not about Canada, Mexico, Brazil, and many other large export and import partners of the U.S. Globalization is moving forward. Perhaps it is more apparent to those of us who travel the world than the arm chair researchers I am almost enticed to believe many of you are, including Ross.

    Comment by Kevin Kane | December 20, 2009

  29. pardon the lack of proof reading in the previous post.Interestingly, it is a bigger pipe dream to believe we can achieve oil independence as oppose to international energy security. Those who think the U.S. will be free from the effects of oil by reducing oil imports are either not very learned in finance or gripping onto some sort of 1980's pandering Good Old Days American dream nonsense.

    Comment by Kevin Kane | December 20, 2009

  30. pardon me, I mean to write, arm chair researchers, including Maury.

    Comment by Kevin Kane | December 20, 2009

  31. "Interestingly, you stated "we are the world."It was sarcasm Kevin."Perhaps it is more apparent to those of us who travel the world than the arm chair researchers"Who said anything about halting globalization? Or trade? Or anything but dependence on imported oil? Traveling the world doesn't give you special insight Kevin. Or access to hidden knowledge. Or the right to talk town to us country bumpkins.

    Comment by Maury | December 20, 2009

  32. Rate Crimes wrote: "If you would do your homework, and be more than an R-Squared parasite, you would realize that I've done the work you suggest."Crimes — remember high school? You have to show your work!Take out the snide comments, and your post was astonishingly content-free. Now, if the proposition that bird whackers provide low cost energy is true, and if you have already done the work to prove it, then it should be no problem at all to demonstrate that low cost to anyone.When someone is given an opportunity to make his case, and then fails to take it, the rest of the human race is quite entitled to draw the obvious conclusion.

    Comment by Kinuachdrach | December 20, 2009

  33. When Rate Crimes talks about 'low cost energy' he is referring to the cost of the energy itself. It sounds like he thinks the world would be a better place if people grew their own food instead of fast food while taking the saving and paying Rate Crimes to install solar panels. When Kinu talks about 'low cost energy' he is referring to his cost for buying electricity. Those of us who get low cost electricity hydroelectric, nukes, and coal have a hard time figuring out why low cost sources that would make are bills ten times higher is a good thing. The answer is that wind and solar is 'earth friendly'. The ubiquitous do it because it is 'green' always comes with no justification of why it is better.

    Comment by Kit P | December 20, 2009

  34. nations have for decades been unable to achieve such ends for peace and control of nuclear weapons.actions to enhance individual and societal security. absence success on those fronts, i'm not hopeful for oil/energy. perhaps we should succeed with global hunger, thirst, and pestilence first. success for those may drag along many other benefits–commodities of many types.fran

    Comment by Anonymous | December 21, 2009

  35. "perhaps we should succeed with global hunger, thirst, and pestilence first."But Fran — we have succeeded in largely eliminating hunger, thirst & pestilence in developed countries through technology & industrialization. One of the major remaining health problems for "poor" people in an advanced country like the US is obesity (!)To deal with those problems in the less developed parts of the world, we need more development, more technology, and substantially more energy. Any serious plan to raise our fellow human beings out of poverty requires providing vastly more energy on a global scale. There aren't enough fossil fuels to do it, and so-called "renewables" will never be more than niche fuels for the rich. The only large-scale increased energy supply option with existing technology & resources is nuclear power. Most of the arguments against the use of nuclear power are founded on ignorance. And in a world where Europeans are busy selling all they can to Iran while it builds nuclear weapons (and such powerhouses as Pakistan & North Korea have already built nuclear weapons), the non-proliferation argument against peaceful nuclear power looks increasingly unconvincing.

    Comment by Kinuachdrach | December 21, 2009

  36. KitP said,"…paying Rate Crimes to install solar panels.""KitP", yet another anonymous poster with no apparent connection to anything real. Once again, "KitP", you're way off the mark.

    Comment by Rate Crimes | December 21, 2009


Sorry, the comment form is closed at this time.

%d bloggers like this: