I got as far as the end of the first paragraph in the article “An America First Energy Plan”, the very first article at the newly-revised White House web site before I was nearly overwhelmed by the desire to fisk all of the policy statements. Here’s the first paragraph:
Energy is an essential part of American life and a staple of the world economy. The Trump Administration is committed to energy policies that lower costs for hardworking Americans and maximize the use of American resources, freeing us from dependence on foreign oil.
Oil independence is one of those evergreens. It’s a promise made by most administrations and it’s as fatuous when asserted by the Trump Administration as when asserted by any other. Let me explain.
The Kingdom of Saudi Arabia is the low cost producer of crude oil. As such it has an enormous influence on the price of oil. If the Saudis pump less, the price goes up. If they pump more, it goes down.
The market for crude is a global one and it reacts to price changes with nearly perfect elasticity. Said another way, Saudi policy dictates the price of oil everywhere including here. When the price becomes low enough domestic producers will stop pumping and we’ll buy more foreign oil.
There’s exactly one way that we can become truly independent of foreign oil: stop using oil entirely. Since it takes about 20 years for the U. S. auto fleet to turn over, ending the use of oil entirely is beyond the ability of any American president.
You see what I mean?
I’m going to let the dust settle before commenting on this stuff. There’s many a slip betwixt cup and the lip. Not only will it will but there will be big differences between what appears on the White House web site and what emerges from the Congress.
And then there’s the fact that lowering oil/energy costs would actually encourage consumption and increase our dependence on foreign oil.
But I don’t want to be cynical. I think we should all work together for a future where the price of oil is well below production cost for US oil, because that would show the damn A-rabs that we are back, baby! Great again!
So does using oil more efficiently. That’s called Jevons’s Paradox.
I cannot stand Mission Statements unless they are part of an actual mission plan with a defined goal. I am only familiar with the military versions, and they are not fluff.
The oil markets work according to perceived future demand and future supply in addition to excess unused supply. There is a storage factor since many traders will never be able to take delivery. In addition, there is the black market and the OPEC cheaters.
The Saudis and OPEC are fairly impotent or they were until recently. Furthermore, nobody counted on the bankrupt fracking wells continuing to produce, but the creditors have no reason to stop a revenue stream.
For the Saudis, bankrupting the frackers is another case of “it seemed like a good idea at the time.”
Each of the policy statements has serious problems. For example, do we really need a 500 ship navy? We have 10 aircraft carriers now. China has one, Russia has one, France has one, India has two. The United Kingdom doesn’t have any.
500 is a nice, round number. Type of ships? Mission? Bases? Personnel? Chinese reaction? And how does this encourage our allies to spend more? Who cares? 500 is a Trump kind of number. If you tweet him that we used to have even more in 1945 he’ll raise the number to 1000.
Which is why as a patriot I drive in sport mode and exceed the speed limit. I only feel bad that I’m driving a six rather than a nice, fat 8. Mercedes has finally produced an S-Class Cabriolet. http://www.caranddriver.com/news/2017-mercedes-benz-s550-mercedes-amg-s63-cabriolet-photos-and-info-news 0-60 in 4.5 seconds, almost 2 seconds better than my current car, even if one doesn’t go the full AMG. A bit pricey, but I’m counting on that Trump 1%er tax cut. Maybe I’ll road-trip to coal country and scatter coins out the window. I want to do my part to trickle.
Yeah, the old oil canard. Even Tammy Duckworth, someone I have a lot of respect for, got in on the action during the EPA confirmation:
“As someone who fought to defend this nation, I’ve seen firsthand the price we pay for our dangerous dependence on oil imported from our adversaries,†said Senator Duckworth. “I am incredibly concerned about what will happen to policies like the Renewable Fuel Standard under a Scott Pruitt-led EPA. These are policies that reduce our over-dependence on foreign oil, strengthen our national security and help grow clean energy jobs in Illinois and across the Midwest. I’ve already been to a war fought over oil, and I would rather run my car on American-grown corn and soybeans than oil from the Middle East. In order for that to happen, the head of the EPA must support and protect policies like RFS, but Mr. Pruitt’s record shows that he will not. His vague, hollow and evasive answers today were designed more to sound good than to mean anything—that’s not the kind of leadership the American people deserve or that they were promised by the President-elect.â€
Dave,
It depend on what you want that Navy to do. If we are going to maintain the capability to intervene globally on short notice, then we need carriers. If we need the ability to quickly support an ally under attack, then we need carriers unless we have forward deployed forces. Those forward forces have been reduced since the cold war ended, so carriers became more important and a mobile platform and a political tool for showing presence and resolve.
The issue with ship numbers is operations tempo. The number of ships needed is tied to how many your national security strategy requires to be at sea for normal peacetime ops plus some overhead for periodic maintenance and contingencies, assuming an overall high readiness level. So the size of the Navy needs to match what you expect it to do. IMO the Navy is undersized for our current commitments (at 274 battle force ships), but I’d say the number should be closer to 300 or 325, not 500. We can keep our current commitments with the force we have, but the cost is reduced readiness.
BTW, I’ve said many times I’m all for reducing our commitments over time which would allow us to have a smaller military. That’s not a popular view among the NATSEC establishment. One aspect of Trump’s stated goals that I like is that he appears to want our allies to contribute more, relatively, to their own defense and that he appears to be more of a realist when it comes to foreign policy (whether he actually will be, and will be in an effective way is another question). The FP establishment are all shitting themselves on Twitter over his inauguration speech, which is about the only good thing I got out of it. Frankly, I’ve had quite enough of Neocon and R2P fantasies bent on turning third-world shit-holes into secular liberal democracies at the point of a gun.
I’ve made no secret of my preference for reducing our commitments and the size of our military accordingly. I wouldn’t argue with a small increase in the number of ship to 300, even 325 depending on the composition of the increase for reasons along the lines you outlined. But restoring the fleet to Cold War levels or above? To oppose whom?
I believe that the Air Force can be reduced in size and the Army can definitely be reduced in size. Our present military is clearly encouraging adventurism.
As I wrote over at Pat Lang’s place this afternoon, NATO is presently doing just about the opposite of what it was intended for. At the very least we should re-evaluate the alliance.
Since we can pretty much get all of our oil from North America (theoretically), I call that a good thing. And since we’ve been able to extract more domestically, it can’t be a coincidence that prices have been favorable, despite economically volatility and an ongoing War Against Militant Islamism. We don’t have to buy a drop from socialist crackpots like Maduro or whackjob Wahabbists like KSA. This does not mean that we should stop conserving, stop increasing efficiencies or stop expanding alternative energy options.
You’re missing the point. As long as KSA is the low cost producer and can influence prices, we will still be at their mercy.
I suspect “energy independence” is more a political device than a goal to be taken literally. In any event I wonder why the exposure cannot be best managed by maximizing N American supply through negotiated agreements, and a defense / pricing pact with Saudi Arabia, especially in light of a more bellicose Iran and the specter of nuclear capability down the road.
i wouldn’t doubt that Guarneri is right, at least about the intent of a Trump administration….the idea being that we create leverage to keep the Saudis from having so much power over the crude market. It also seems like fracking and increased drilling (in some areas that have been closed to it because of environmental regulation) give the US some leverage when we’re at the higher end of the price curve, even if they aren’t as useful when global supply is high. Not sure what that means for the oil industry, since investment is high and they can’t turn on a dime, but again, I think the idea is leverage.
David, the Saudis have already tried to undermine US shale by ramping up production and have failed. Now they’re talking about diversifying, getting into finance. Venezuela took a massive hit and Iran, even though it’s a low-cost producer, is not getting the big financial windfalls they wanted from the lifting of sanctions. Russia’s production has been less profitable, and they’ve taken a hit from sanctions. In other words, if they glut the market, they make less money and they hurt the other oil-producing nations that have advanced cases of Dutch Disease. If they cut production, prices go up and the oil sector, including ours, make big profits.
I would say that it’s a good thing for the US to be able get all of its oil from North America if only to buffer ourselves from oil production mischief played out by other nation-states that have actively worked–and will work–against our interests. And it’s not like we don’t have our influence. When crude goes above $60 a barrel, the US can turn on the spigots pretty quickly to keep the price down, which is something we couldn’t have done had we not taken more control of geological destiny.
I agree that there are geopolitical reasons to produce more oil here. Characterizing that as “oil independence” is misleading. As long as there’s a global market we’ll never be independent.