Glenn Reynolds has suggested a solution of oil problems that should not be unexpected from an instant right-wing pundit:
- Of course, if we seized the Saudi and Iranian oil fields and ran the pumps full speed, oil prices would plummet, dictators would be broke, and poor nations would benefit from cheap energy. But we'd be called imperialist oppressors, then.
I happen to think that Sean's prediction is a flawed prediction and Reynolds is closer to the truth than Carroll. Let's analyze the statements one by one.
Prices would plummet
Sean thinks that they won't plummet because the oil fields are essentially running at full capacity. Sean has a naive idea about the driving forces behind these prices. In 2002, the oil price was $18 instead of $70. Does it mean that the oil fields were running at a much-higher-than-full capacity?
The oil price is a very volatile quantity that sensitively responds to many different factors. The consumers are ready to pay higher prices because they feel that oil is something valuable that can cease to be available tomorrow. OPEC's statements have a dramatic impact on the price. If there were real competition, the prices could drop. Of course, the conflicts started by September 2001 did not really move the oil industry in this right direction.
Dictators would be broke
Sean thinks that dictators are rich even without oil. In principle, dictators can be rich even without natural resources, but it is naive to claim that oil does not make them richer. In Reynolds's article, many figures are listed that show how the regimes of oil-rich countries financially benefit from the higher prices.
Poor nations would benefit
Sean argues that oil price is more important for rich countries because they consume most of oil. That's completely unrealistic, much like the previous points: Sean completely fails to understand basic concepts of economics such as marginal utility. Surely, he is not the only one: various Deltoids (as well as virtually all readers of Cosmic Variance and Deltoid) should be listed at this point if the text were to be complete. All of them are ignorant about rudimentary economics.
Rich nations and people may consume more oil, but oil is still a smaller percentage of the money that they must spend and a change of the price has smaller consequences. Poor countries are affected by higher prices more than the rich ones because an increased price can really mean that they can't afford oil at all. This is why many officials have proposed an IMF-backed fund to help the poor countries hit by oil price volatility. See, for example, BBC or Sinha's calls.
We would be called imperialist oppressors
I think it is obvious that even if a fuller control by U.S. capitalism led to a smaller influence of dictators, lower prices, and stronger growth of the economies, especially the poor ones, the U.S. would be blamed as an imperialist oppressor. Even Sean Carroll agrees that it is the case. But he disagrees that it would be inappropriate to blame the U.S. for such changes. Well, if the governments and political systems impose things such as affirmative action, stifling political correctness, nationalization of corporations, huge redistribution plans, far left-wing blogs offer their support. If someone thinks about government plans that would actually make things better, not worse, and cheaper, not more expensive, far left-wing bloggers complain about imperialist oppression.
The far left-wing approach is counterproductive for everyone who actually wants to live in a better world.
And that's the memo.