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Fungibility and the Lesser of Two Evils

A recent e-mail of the day from one of Andrew Sullivan's readers:

President Bush worked in the oil industry for years. So did his father. So did many of his close friends. He obviously knows (I hope) that if new technologies were to reduce our total oil consumption by something like 5 million barrels a day by 2025 that no one can simply choose, on a country by country basis, where that savings is going to come from. Yet clearly this is what he implied; that the decrease would all come out of our Middle East imports. If anything, we're liable to get a greater proportion of our oil from the Middle East. Simple economics tells us that if we reduce our demand for oil imports the country that is likely to suffer most is Canada, as they have the highest costs of production. The cheapest oil comes from the Middle East.

So we're left with yet another 'lesser of two evils' conclusion here: either President Bush spent years in the oil industry (not to mention Harvard Business School) and yet failed to absorb even the most basic knowledge about that industry, or that he knows full well that what he's saying isn't true, but is willing to say it anyway if he believes it benefits him politically.

I've written about this before. Oil is a fungible resource. The only way to "replace more than 75 percent of our oil imports from the Middle East by 2025," as the President promised in his State of the Union address, would be to raise the cost of Middle East oil relative to other oil, either by imposing taxes on Middle East oil or by subsidizing oil not from the Middle East. I'm no trade expert, but I'm pretty sure that either would be a glaring violation of our WTO obligations. So this is a ridiculous assertion, and like Sullivan's reader, I'm left wondering: is Bush uninformed about his supposed area of expertise, or is he lying?


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