Pump Prices Hurt Americans Not Just in Pocketbook
Highlights from the WSJ July 8, 2008
Referencing a McKinsey Research Study
“Both presidential candidates are focusing on the economy this week, and for good reason: $4-a-gallon gasoline has Americans sliding into pocketbook shock.
But pain at the pump is only one reason energy now should be the central issue of this year’s campaign. Here’s the other, more insidious one: High oil prices are shredding America’s financial independence and producing a massive transfer of wealth from U.S. pocketbooks into the hands of suspect actors around the world, including Iran, Venezuela and Russia.
The U.S., in other words, now has an energy problem that is not only draining the bank accounts of its own citizens, but filling up the bank accounts of some who work against American interests around the globe … Oil-producing countries are accumulating piles of excess cash that they can use — and are using — to buy pieces of Western companies … (to buy) the U.S. Treasury bonds that finance the federal government’s budget deficit (foreigners buy 80% of all newly issued Treasury bills) … (and) to advance anti-American political [and military] agendas.
To their credit, Sens. John McCain and Barack Obama are trying to raise awareness of the corrosive national-security effects of oil prices. In his recent centerpiece address on energy, Sen. McCain declared: “When we buy foreign oil, we are enriching some of our worst enemies.” As far back as last fall, Sen. Obama said in a speech that money spent on foreign oil “corrupts budding democracies and allows dictators from hostile regimes to threaten the international community.”
* * * * *
Observations:
1. Right now, about 1/3 of US oil is sourced domestically, about 1/3 comes from friendly nations (Canada, Mexico), and about 1/3 from problematic nations. Let’sdrive less and drill more to at least cover the most problematic 1/3 of our consumption.
2. Both candidates have to stop parsing words and make the issue visceral — e.g. “roughly $1 of each gallon of $4 gas goes into the pocket of folks who don’t like us and want to hurt us” — “what are the prospects for long-term job security if US companies are increasingly foreign-owned?”
* * * * *
Full WSJ article:
http://online.wsj.com/article_print/SB121546528614733687.html
McKinsey Global Institute special research study
“The New Power Brokers, Oil, Hedge Funds, Asia”
http://www.mckinsey.com/mgi/publications/The_New_Power_Brokers/index.asp
The Homa Files 
July 10, 2008 at 3:57 pm |
I am curious to know how you define “folks who don’t like us and want to hurt us.”
The top 15 U.S. oil suppliers are (in order):
CANADA – not controversial
SAUDI ARABIA – certainly not a lot of love for the U.S. there, but the government (which controls the oil and reaps the benefits of high prices) has been a solid U.S. ally for years. Saudi Arabia has never attacked the U.S.
MEXICO – not controversial
NIGERIA – plenty of problems, but hardly a country hostile to the U.S.
VENEZUELA – lots of anti-U.S. rhetoric, but Venezuela has never done anything to harm the U.S.
IRAQ – the U.S. controls the government of Iraq
ANGOLA – see Nigeria
ALGERIA – the U.S. likes the Algerian government so much that it has helped it stay in power even after the opposition won a democratic election.
BRAZIL – not controversial
KUWAIT – the U.S. likes the Kuwaiti government so much it started a war with a country that never threatened us – Iraq – to keep the Kuwaiti rulers in power.
ECUADOR – an even less threatening version of Venezuela
COLOMBIA – plenty of problems there, but the U.S. props up the government with money and weapons. Certainly no threat to the U.S.
CHAD – see Angola
RUSSIA – the second most threatening country on this list. Has never attacked the U.S.
LIBYA – the most threatening country on this list. Sponsored terrorist attacks against the U.S. in the 1980s, but has since renounced terrorism and made peace with the U.S.
I don’t see a single government on this list that is actively trying to “hurt us.”