Did Scotland return convicted Lockerbie airplane bomber Abdel Basset Ali al-Megrahi to his native Libya, not because he has terminal prostate cancer, but instead to help curry favor with an oil-rich government? If so, it would be doing pretty much what the United States has been doing since 1945: cozying up to one of the worst human-rights abusers on the planet, the government of Saudi Arabia, according to Ivan Eland, director of the Independent Institute's Center on Peace & Liberty.
Eland offers several economic and geo-strategic reasons why a policy of embracing oil autocrats is neither necessary nor desirable. First, oil is not, as most policymakers believe, too strategically important to rely on the profit motive to secure its delivery. In fact, the profit motive is so strong that even the OPEC oil cartel cannot effectively restrict the flow of oil to the world market for very long, according to Eland. Second, the U.S. military presence in the Persian Gulf does not enhance oil stability; it undermines it by inflaming radical Islamists. Third, rising oil prices per se do not send industrial economies into a tailspin. The stagflation of the 1970s was caused by bad domestic policies, not oil prices.
Today, the U.S. economy is even more resilient to oil shocks because the cost of oil makes up only 3 percent of GDP--half of what it did in the '70s, according to Eland.
"Instead of coddling oil-producing tyrants like Moammar Gadhafi and the Saud family, the United States and other industrial countries should let the market work," writes Eland. "We should not pay a premium for oil by sacrificing our principles or pursuing unnecessary, costly and counterproductive military activities."
"Fallacies in U.S. Oil Policy," by Ivan Eland published in the Pittsburgh Tribune-Review, 27 Aub 2009.