The Hidden Cost of Imported Oil

In an online debate at the Wall Street Journal's Econoblog (subscription required), University of California at San Diego professor James Hamilton took a moment to discuss the hidden costs of continuing to import oil from unstable regions of the globe:

As the U.S. and North Sea reserves get depleted, the world is increasingly reliant on places like Saudi Arabia, Iran and Venezuela, whose governments are actively using the oil revenues they receive from us in ways that are very fundamentally contrary to the interests of most OECD nations. Putting a dollar valuation on this is difficult. How many more Beslan children or London commuters might be alive today if the Saudis had not poured so many billions of dollars into promoting global Wahhabism? How much freer would the people of Lebanon be without Iran's heavy support of Hezbollah? And how much of the U.S. military budget is devoted to protecting Americans from such threats? I'm not sure, but it is clear to me that there is some externality associated with the geographic realities of peak oil.

And for those of you who believe that importation of natural gas can help solve this problem, think again, as many of the sources of natural gas are as politically unstable as the sources of oil.

Technorati tags: Nuclear Energy, Environment, Energy, Politics, Technology, Economics

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