Egypt and Global Oil Supplies
The ongoing situation in Egypt has U.S. elected officials in a huff over volatile oil prices, as significant amounts of oil are shipped to the United States through the Suez Canal. Oil has risen approximately 5.5 percent to $90/barrel in the last week, much of the increase attributable to fears over supply issues.
From this, politicians find impetus to support the idea of micro-managing the U.S. economy:
“I’m optimistic that further technology advances, both in vehicles and fuels, could make us even less reliant on imported oil than the current forecast predicts,” Bingaman said. “I hope that Congress will have the good sense to remain on this path toward increased energy independence.”
Much of the support comes in the way of opening up access to offshore drilling. This is a good idea, but it won’t make very significant dents in actually reducing petroleum imports given U.S. consumption and availability of off-shore oil supplies.
The other support, such as that of FedEx CEO Fred Smith, are a number of policies intending to reduce our reliance on oil overall. These are bad ideas. It would be ideal if the price of oil wasn’t quite as volatile, but the volatility is still preferable than any alternatives. Electric cars, despite generous subsidies, are still incredibly expensive (and have numerous other problems such as difficulty charging them, lack of a significant charge, etc.). Biofuels cannot be produced in significant quantities without vast amounts of government subsidies/mandates, and even the relatively modest amounts of biofuels produced in the United States today have caused a number of unfortunate environmental consequences, which will only increase as production increases.
Though politicians often hate letting a crisis go to waste, they will offer few positive solutions in this case, unless it involves removing government obstacles from the marketplace.