October 17, 2003


The Poisoned Well (FOUAD AJAMI, 10/17/03, NY Times)

From the distance of three decades, we can see oil's curse — and its ambiguous gift. It wasn't just Iran that was undone by sudden wealth. On the shores of the Mediterranean, Algeria succumbed to barbarous slaughter; a war erupted between that country's rulers and insurgents who draped their wrath, and the fury of their dispossession, in Islam's banners: Hezbollah (the Party of God) on one side, Hizb Fransa (the Party of France) on the other. For nearly 15 years, the slaughter went on in the cities of the country, while the work of oil continued uninterrupted in the Sahara. The killer squads of the regime and the merciless insurgents both fought for oil's bounty.

In Iraq, the ruin had a different story line: here oil was tethered to state terrorism, and a displaced peasant thug from the town of Tikrit, fired up by the dreams of money and oil, set out to wreck his country and to plunge the world into endless discord.

We are still in the grip of that historical moment. That wayward son of Arabia, Osama bin Laden, is a child of the oil revolution. He came of age amid the new wealth; it was petromoney that he took to the impoverished mountainous land of Afghanistan.

And it was petromoney that brought about the demographic explosion that has swamped and unsettled Arabia. Thirty years ago, less than 7 million people lived in Saudi Arabia; today the estimate is about 17 million. For every member of the lucky generation that came into its own in the years of plenty, there are several more younger claimants now choking on failure and disappointment.

The mind plays tricks here: as the wealth of 1973 was evidence of divine favor, so the retrenchment is a sign of divine disfavor, and a call on the faithful to rectify the course of history. Belligerent piety now fills the void, gives order and meaning to the capricious cycle of history, its boom and bust.

Experts Mull Threat of Another Oil Embargo (Peter Brownfeld, October 17, 2003, Fox News)
Some experts are saying the United States could face an energy crisis on the scale of one 30 years ago, when an oil embargo by Arab nations sparked an economic downturn, long lines at the gas pump and the fear of oil rationing.

“Our dependence [on foreign oil] is growing, and, worse, our dependence on Middle East oil is growing,” said Gal Luft, executive director of the Institute for the Analysis of Global Security (search).

According to the Department of Energy's 2003 Annual Energy Outlook (search), net oil imports accounted for 55 percent of total U.S. demand in 2001, up from 37 percent in 1980 and 42 percent in 1990.

By 2025, imports are expected to account for 68 percent of U.S. demand. Oil imports from the Middle East have doubled since the 1970s, and now are about one-fourth of total imports. By 2020, the share of imports from the Middle East is expected to rise to one-half, the Energy Department's report states.

Because of America’s increasing reliance on Middle Eastern oil, some experts warn that the United States is no better insulated from the political instability of that region now than it was in October 1973, when Arab nations, angered by U.S. support for Israel in the Arab-Israeli war, announced an oil boycott of the United States and some other Western nations.

Presumably new oil resources in places like Russia, China, and Africa will forestall this scenario, but for our own good and that of the nations that get addicted to the revenues from the stuff, we should precipitously increase gasoline taxes (50 cents a gallon or more, off-setting them in other areas so that tax revues are at worst neutral).

Posted by Orrin Judd at October 17, 2003 3:14 PM

Right. Except if you happen to live where there are large, horned animals -- like certain fellows in N.H., and others in parts of Texas -- it might not be the worst idea in the world to drive large, gas-intensive vehicles.

Posted by: Chris at October 17, 2003 4:39 PM

Actually, check that: I misread the last line. My apologies. My question, then, is, ceteris paribus, if the taxes are offset, where's the disincentive to stop using oil? If the price doubles but I have exactly that much extra cash, why wouldn't I spend it on the gas I need?

Posted by: Chris at October 17, 2003 4:40 PM

If you need it you would, but you'd pay for it. The incentive is to do other things that are cheaper and then use your money on other stuff.

Posted by: oj at October 17, 2003 4:47 PM

Or we could just station hundreds of thousands of troops in the middle east.

Posted by: David Cohen at October 17, 2003 4:59 PM


That neither saves money nor serves good social purposes nor limits environmental degradation though, does it?

Posted by: oj at October 17, 2003 5:07 PM

And those aren't even the major benefits.

Posted by: David Cohen at October 17, 2003 6:55 PM

If I'm reading Congressional testimony correctly, approximately 160 Billion gallons of gas and diesel fuel are sold annually. An increase in taxation, of a dime per gallon, would bring in $16 Billion a year. If that money were exclusively applied to commercializing alternative fuels, the US should be self-sufficient in a decade.

However, increasing the tax by 3.33 cents a year, for three years, would be preferable to tacking on a dime tomorrow.

Not to mention ANWR and the Gulf o' Mexico, which are woefully underdeveloped.

Posted by: Michael Herdegen at October 18, 2003 9:46 AM

"If that money were exclusively applied to commercializing alternative fuels, the US should be self-sufficient in a decade."

Didn't Jimmy Carter once make the same argument?

Tossing more money for alternative fuels research is unlikely to make them a reliabe alternative to fossil fuels any time soon.

Posted by: M Ali Choudhury at October 18, 2003 10:16 AM

I agree with Michael, except on the details.

Increasing the tax incrementally would lessen the impact on our economy (read that the world's)and allow an orderly change in transportation choices by the public and business. As our consumption decreased we might assume oil prices would decline proportionately. That reduction would determine the schedule for the next incremental tax increase, essentially keeping the price of petroleum within a acceptable range. Who knows? We could ultimately reach OJ's $.50, John Anderson's goal in his losing primary campaign in 1976, without seriously harming the economy or those who are economically disadvantaged.

Without exception when I drive on the interstate these days the traffic moves along at 75 MPH, I along with it. I'd like to see the President reimpose the 55MPH speed limit so we could all zip along at 65MPH adding additional improvement in gas milage and reduction in highway maintenance. It could be part of his energy program where he's taking a hit on the lack of conservation measures.

Where would the tax money go? How about a "Manhattan Project" on reducing our overall dependance on petroleum, paying for 100% inspection of all cargo entering the USA ... or just reducing the national debt. With a few more twists this could be a part of the Bush legacy.

Chris, I live in NH at 1200' on a north slope and a gravel road the town plows in winter with a road grader. I don't have a 4WD and get along quite nicely. I'm going outside now to cut some wood.

Posted by: genecis at October 18, 2003 12:30 PM

M Ali:

They didn't spend the equivalent of $130 billion dollars on energy research during the Carter administration.

There are six promising technologies that are within striking distance of current energy costs: Wind, solar, hydrogen, tar sands, pebble bed nuclear reactors, and clean burning coal.

If you're really interested, I could outline how each would fit into the future's energy picture.

Posted by: Michael Herdegen at October 19, 2003 12:15 AM

There's no reason to imitate the energy policy of Europe. We'd be better served giving tax cuts to explorationists and people who do cutting-edge extraction (such as from sands and shale).

Posted by: kevin whited at October 20, 2003 2:14 PM


That's if you like the culture of cars and driving. I don't.

Posted by: oj at October 20, 2003 2:21 PM