Let’s Be Energy Independent…Not

“Energy independence” is a bad idea. Every individual understands that it is far better to depend on others for most of what we want rather than trying to do everything for ourselves. This is true whether we’re buying oil or haircuts. The principle applies to groups of individuals living in large geographical areas called countries.

Energy “dependence” is much cheaper. In fact, the case for being “dependent” on other countries for oil is the same as the case for being dependent on other countries for bananas or coffee. At some tariff-protected price, the United States could be self-sufficient in bananas or coffee. If the price were high enough, someone would grow bananas and coffee plants in greenhouses. But why would we want that? Why would we want to pay more for coffee and bananas than we need to?

Another way of saying that we would pay more is that we would give up more of our resources (capital, labor, and land) to have domestic bananas and coffee than we now give up by producing other things with these resources and using the proceeds to buy coffee and bananas more cheaply abroad. We would be poorer.

The reasoning doesn’t change when the good is oil. By preventing people from importing oil, either with a ban on imports or a tariff on oil, the government would make us poorer.

Or think of it another way. Do you ever take your shirts to the local cleaner to be washed? If so, you are “dependent” on the cleaner. You could wash your shirts yourself, but you don’t. The reason you don’t is that your time is more valuably used producing other things, some of which you sell, and using some of the proceeds to pay the cleaner.

~Economist David Henderson in The Freeman

MP: As David Henderson points out, advocating “energy independence” is as nonsensical as advocating “banana independence,” “coffee independence,” “lumber independence,” “clothing independence,” “diamond independence,” “cashmere independence,” “spice independence,” etc. for the U.S. In fact, the inevitable result of the logic of “energy independence” is complete and total self-sufficiency for the U.S., with no imports and no exports, and complete “foreign trade independence.”

But if economic self-sufficiency actually made the U.S. better off, wouldn’t it also make the state of Michigan better off? And if economic self-sufficiency made the state of Michigan better off, wouldn’t it also make each of Michigan’s 83 counties better off to be self-sufficient? And if economic self-sufficiency made each county better off, wouldn’t it also make me better off as an individual, to be “energy independent,” “food independent” and “clothing independent?” If so, I guess I better start chopping wood and converting my back yard into a vegetable garden.

Subscribe by RSS Subscribe by Email

Comment by John Lounsbury

2008-10-08 22:49:53

This is a non-sensical argument. If you have the choice of making your own or buying from someone else, you are free from economic blackmail. Of course we can import oil whenever it is cheaper than producing our own energy. But if we have no options when oil is expensive we will become a failed economy. The arguments about coffee or bananas are irrelevent. If we could make more money growing our own bananas or coffee, facilities could be established in a very short time. Not so with energy. Also, we would not destroy our economy by forgoing bananas or coffee when they became too expensive. Not so with energy.

Reply to this comment