Victor Davis Hanson: How Oil Lubricates Our Enemies

The American Enterprise online ^ | July/August 2006 | Victor Davis Hanson

[neverdem]

With the collapse of the Soviet Union, Marxism was discredited as an unworkable--and often murderous--alternative to consumer capitalism. Eastern Europe was freed and began to prosper in a manner unimaginable just a decade earlier. China and India jettisoned statism, and found prosperity by emulating Hong Kong, Japan, Singapore, South Korea, and Taiwan. South America was democratizing and began to liberalize its economies (with mixed success).

Here in the U.S., Americans grew freer and richer than at any time in their history. In contrast, Europe's creeping democratic socialism left much of the continent with low economic growth, high unemployment, a demographic crisis, and a growing cultural pessimism. In short, there was global proof that the more individual freedom and capitalism, the more the good life followed.

Why, then, are socialists such as Hugo Chavez in Venezuela and Evo Morales in Bolivia now expanding an anti-capitalist bloc in Latin America--nationalizing companies, jailing dissidents, and whipping up the cult of Che Guevara and Fidel Castro from Peru to Mexico? Why here at home, when the stock market is near all-time highs, the unemployment rate low, and home ownership at record levels, with interest rates and inflation both in check, do the American people express little confidence in their economy and President Bush's leadership?

And given that there are more democracies now than in the history of civilization, why is the United Nations proving more illiberal than ever--blackmailed by Saddam Hussein to waffle on sanctions, mired in a tawdry $50 billion scandal, and unable to bring a renegade theocracy in Iran to meet minimal compliance with international nuclear nonproliferation standards?

The answer to all of these diverse anomalies is oil, oil, and more oil. During the last two years, a booming global economy, uncertainty in the Middle East, and the arrival of newly capitalist but petroleum-poor India and China have created a seller's market unprecedented in the history of the oil industry. The resulting jump in the price of petroleum has distorted both politics and perceptions of what works in economics and politics, and what does not.

Take away the $300-500 billion in windfall profits piled up in the coffers of the oil-exporting nations recently, and Hugo Chavez becomes just another spluttering Castro, hardly able to pay for his bankrupt populism in Venezuela, much less export it beyond his borders. Without petroleum largesse, Iran's Mohammed Ahmadinejad could afford neither a multi-billion-dollar nuclear weapons program nor costly subsidies for terrorist groups like Hezbollah and Hamas. Vladimir Putin's crackdown on capitalists, political freedom, and further Russian reforms comes only because he controls energy exports vital to the world economy.

And huge petroleum profits don't just empower dictators, subsidize nuclear proliferation, and curtail economic reform. They also have pernicious psychological effects. Americans hit with gasoline price hikes of nearly a dollar a gallon have fallen to despairing over our economy. Try telling furious motorists that the extra cost for most drivers amounts only to about $500-700 per year--a pittance compared to sky-high housing prices that leap tens of thousands of dollars annually. No matter: people see the numbers on the gas pump, and less cash in their wallets, and figure the U.S. is teetering on the brink.

Foreign policy is warped as well. Because of its dependency on Middle East gas and oil, Europe's high talk about human rights doesn't apply much to Arab extremists with energy-rich patrons in the Gulf. America is in a war against Islamic fascism, yet treads carefully around Saudi Arabia, despite the kingdomÍs subsidies to America-hating madrasahs. When poor oil-importing countries in Africa and Latin America make sacrifices to enact tough market reforms, their hard work only helps to enrich failed states like Iran, Libya, and Venezuela lucky enough to have an accidental resource beneath their feet that was found, exploited, and mostly purchased by the Westerners they demonize.

Next time we whine that we cannot drill in the Arctic or off our coasts, that nuclear power is too dangerous, that government-encouraged conservation violates free enterprise, or that gasification from coal and shale is too costly, we should remember: There are insidious--and dangerous--costs in today's oil trade too.

[coconutt2000]

The MSM is to blame really. If they weren't mostly pro-socialist, anti-American propagandists the truth about the failures of despots and Marxists would be widely known in third world countries.

Instead those countries are showered with conflicting reports about America's immorality, brutality, and prosperity... and to top it all off, socialism is promoted as the moral and just alternative. No mention of the lack of prosperity under socialism is ever made.

[o_zarkman44]

Bingo!

People just don't understand supply and demand economics.

[garbageseeker]

Ping

[backhoe]

I have covered, ( Or, as Seamole puts it...-backhoe's pseudoblog--... ) pseudo-blogged, these issues for years, so allow me to drop out of Lurk & Link mode for a rare bit of commentary-- we all need to get serious about our dependency on foreign sources of energy, and use our own resources.

Our consumer-based economy is driven by and dependent upon readily-available, reliable energy-- choke that off, and we'll all be back to using one rotary dial phone in the dining room, watching one TV in the living room, and driving one car per family-- probably a Hudson Hornet or a Nash Metropolitan...

We need to

1) end the nonsensical ban on offshore drilling off California and Florida--read & weep:
Castro Plans to Drill 45 Miles from US Shores, But We Can't

2) build a lot of next-generation nuclear power plants, not just for electricity, but for any process requiring heat, power, or steam.
And if we replaced our existing nuclear plants with this one there would be significant benefits.

3) end Jimmy Carter's idiotic ban on recycling nuclear waste, and reprocess the stuff rather than fighting over where to bury it. Europe has done this for decades.-- what to do with spent nuclear fuel? Answer here: http://www.freerepublic.com/focus/f-news/1468321/posts?page=50#50 hattip:  Mike (former Navy Nuclear Engineer)

4) use the 300-500 years worth of coal we have on our own land, using the new clean-coal technology.
-Clean Coal Centre--

5) and finally, there's nothing wrong with conservation, we should all practice it- but you can't conserve your way out of a shortage. Nor is there anything wrong with "alternative" energy sources- except they don't supply the vast ( not to mention readily-available ) amounts of power we need at a price competitive to more conventional sources. Then again, there is this to ponder:
Energy From the Gulf Stream
http://www.energy.gatech.edu/presentations/mhoover.pdf

We do need to get serious about this before we get strangled by a bunch of petty thieves and dictators who don't like us much.

My tongue-in-cheek collection of energy-related links:

Sticker Shock-$3 a gallon gas? Click the picture:

And kindly note, and note well-- the first reply to this post ( when gas was $1.45 a gallon ) was derisive... so, who's laughing now?

Vest-Pocket Summary:

1- drill for gas & oil like crazy- onshore, offshore, and in Alaska
2- go nuclear for power
3- convert stationary plants to clean coal technology or Next-Gen Nuclear
4- slash taxes and regulations like crazy

[kellynla]

BTTT

[Tolik]

    Victor Davis Hanson Ping ! 

       Let me know if you want in or out.

Links: FR Index of his articles:  http://www.freerepublic.com/focus/keyword?k=victordavishanson 
His website: http://victorhanson.com/     NRO archive: http://www.nationalreview.com/hanson/hanson-archive.asp

[Tolik]

You Nailed It, FRiend!

[bitt]

bump ping

[MarineBrat]

A very good post. I'd wish you had included dispersed (individual homes) solar power though. Particularly for those of us who live in areas with 250+ days of pure Sunshine. I believe that the ROI for solar around here (US desert) is about 10-12 years, compared to 20-25 (or never) in the northeast.

Even if the ROI is identical to the life of the equipment, so what? That's 25 years that a homeowner's money didn't go to some sandmaggot who wants to kill him.

[Alamo-Girl]

Thanks for the ping!

[humint]

Try telling furious motorists that the extra cost for most drivers amounts only to about $500-700 per year--a pittance compared to sky-high housing prices that leap tens of thousands of dollars annually. No matter: people see the numbers on the gas pump, and less cash in their wallets, and figure the U.S. is teetering on the brink.

Great article, however this point is a little misleading. Energy is a root commodity and while complaints may be heard at the pump, the price of virtually every product we buy depends on the cost of energy. Energy is required to make what we buy and or ship what we buy. The price at the pump is like a red flag, a domino like predictor of price increases in other areas. To keep prices of those items flat, industries will have to cut costs, most likely labor costs. Such cost cutting have their own set of implications which can also be negative.

The brink... I suppose it depends on what one is trying to describe by suggesting we are at the brink. In terms of energy as it relates to our economy, we are at a kind of brink. Make no mistake.

[potlatch]

[devolve]

In a Yugo.....

[potlatch]

Naa, that bottom one looks like a Hummer to me. You may be speaking in your secret language again, lol.