Getting out of the Gulf - The Path to Free Market Oil

[Makalakumu]

I really enjoyed this article. The writer sums up some points I've been attempting to argue for a long time.

http://voices.yahoo.com/getting-out-gulf-path-free-market-oil-10941556.html?cat=9

American policy-makers have been beholden to the myth that the Saudi monarchy alone prevents the strangulation of the region's oil. Whether willingly or not Washington has been duped. Assuming the Saudis were replaced by Islamists they would certainly sell oil to the West with the difference being that it would be sold at market prices and not at artificially cheap rates as before. The late Professor Chalmers Johnson agreed that "without our interference, the Middle East would continue to export oil," and if, in view of the newly level playing field in which other currencies can compete, China (or anyone else) begins "buying up an ever larger share of what remains underground in those lands, perhaps that should spur us into conserving more and moving more rapidly into the field of alternative energies."At all events, it will be far easier for Americans to adapt to oil prices always in flux according to global supply and demand rather than continue bearing the expense of defending the Saudis who depress oil prices for our ostensible benefit.

The first reason why I like this article is that it is getting honest about the national interest of the US in the Persian Gulf region in the first place. We support the Saudis militarily because they sell us cheaper oil. We manipulate the political interests in the region with diplomacy, CIA ops, and military strength to accomplish the same goal. The idea has always been to out position any other players for this resource. Terrorism is just an excuse, there are lots of bad guys and lots of people who hate us all around the world, but we focus our attention here because of this interest.

Now, because we honestly dealt with the fundamental reason we're in the Gulf, we can begin to have a discussion as to the policy's pros and cons.

It so happens that there are hidden costs to our current uneconomic energy policy which are outlined in the summary of Ivan Eland's new book "No War for Oil." "According to one estimate, gasoline would cost U.S. consumers $5 more per gallon if federal spending for the defense of Persian Gulf oil were incorporated into gas prices. The U.S. military subsidy for oil means lower prices at the gas pump, but consumers ultimately a pay a steep price for that fake discount (and more) in the form of higher taxes and inflationary deficit financing to help fund a large U.S. military presence abroad. The king's ransom that the United States spends to defend Persian Gulf oil is more than ten times the value of its annual imports from the Gulf."

This paragraph demonstrates the mind blowing inefficiency of the government's foreign policy as a whole. It would be so much more cheaper (and more peaceful) to let the free market work and buy the oil at the real price. In a way, the costs of the US's foreign policy are just like any other costs that get pushed on to the consumer whenever government tampers with the free market. The bottom line is that oil would be cheaper if the government stopped interfering (as is the same with any market). This means getting out of the Persian Gulf.

This last paragraph spells out the long term political effects for getting out of the Persian Gulf.

Final and foremost of all benefits to free market oil would be the end of the war on terror. There being no need to police and patrol the Persian Gulf, the withdrawal of our military presence from the Mideast would do more to mitigate anti-American terrorism than decades of democracy-promotion and nation building. In fact, the political character of these petro-states would shift on their own as the vast wealth accrued from selling oil at below-market rates becomes diminished and the princes and emirs can no longer use it to bribe their subjects or buy arms to suppress popular discontent. These Gulf monarchies would have little choice but to cut a deal for a more representative government and refrain from treating oil funds as their private stash. Islamist insurgencies whose grievances are against dictatorship would be incorporated into the political process. This moderation would occur without prodding from the U.S. and we'd save trillions. Stop interfering in the oil market and get out of the Persian Gulf--what a small price to pay for stability in the Middle and becoming economically sound.

QFT!!!