"Let us deal with the myth of decreasing U.S. dependence upon crude oil first. When one hears the numbers which show the U.S. economy currently squeezes more than twice the amount of real GDP from a barrel of crude oil than it was able to in the 1970's, the distinct impression of less dependence upon crude oil is conveyed. However, the exact opposite is true. The U.S. economy is more than twice as dependent upon crude oil now than it was in the 1970's. How so? Since the decade of the 1970's the U.S. has not weaned itself from dependence upon crude oil in any meaningful way. Virtually every sector of the economy relies upon crude oil or its derivatives as a crucial element for economic activity. Had the U.S. pursued alternatives to crude oil, and displaced crude oil from its elemental, central role in economic activity of every kind, that would be a different matter. But the U.S. has not done so. Instead, it has pumped up its level of real GDP to the enormous size we see today, but with crude oil still inseparably intertwined at virtually every level of economic activity. As such, by squeezing more than twice the real GDP from every barrel of crude oil, the U.S. has dramatically increased the leverage that each barrel of crude oil enjoys over the GDP. In the 1970's, losing a barrel of crude oil would result in the loss of less than twice the real GDP as compared to today. Conversely, today the loss of a barrel of crude oil results in the loss of more than twice the real GDP as compared to the 1970's. Does that sound like less, or more, dependence upon crude oil? It amounts to more dependence for the simple reason that a barrel of crude oil has more than twice the leverage over the economy than it did in the 1970's. Losing that barrel of crude now hurts more than twice as much as it did in the 1970's. Added to this disturbing fact is the truth that the U.S. currently is far more dependent upon foreign crude oil imports than it was in the 1970's, now importing well over 60% of its needs. With respect to crude oil dependency, therefore, the U.S. economic position is very much weaker than it was in prior decades."
geostrategymap.com
Thoughts Bert, anyone? |
