The Axis of Oil

Max Boot has an excellent piece in today's Los Angeles Times about the relationship between oil prices and dictatorships. Boot notes that:

Of the top 14 oil exporters, only one is a well-established liberal democracy — Norway. Two others have recently made a transition to democracy — Mexico and Nigeria. Iraq is trying to follow in their footsteps. That's it. Every other major oil exporter is a dictatorship — and the run-up in oil prices has been a tremendous boon to them.

My associate at the Council on Foreign Relations, Ian Cornwall, calculates that if oil averages $71 a barrel this year, 10 autocracies stand to make about $500 billion more than in 2003, when oil was at $27. This windfall helps to squelch liberal forces and entrench noxious dictators in such oil producers as Russia (which stands to make $115 billion more this year than in 2003) and Venezuela ($36 billion). Vladimir Putin and Hugo Chavez can buy off their publics with generous subsidies and ignore Western pressure while sabotaging democratic developments from Central America to Central Asia.

The "dictatorship dividend" also subsidizes Sudan's ethnic cleansing (it stands to earn $4.7 billion more this year than in 2003), Iran's development of nuclear weapons ($45 billion) and Saudi Arabia's proselytization for Wahhabi fundamentalism ($149 billion). Even in such close American allies as Kuwait ($35 billion) and the United Arab Emirates ($36 billion), odds are that some of the extra lucre will find its way into the pockets of terrorists.

Boot correctly notes that while the price of oil isn't a serious short-term economic concern ("Even with crude selling at more than $71 a barrel and gasoline at about $3 a gallon, the U.S. economy continues to expand. It grew at a healthy annualized rate of 4.8% in the first quarter, and there has been no sign of a slowdown since. Oil is a much smaller part of the economy than it was during the oil shocks of the 1970s, and retail prices are still half of what the more heavily taxed Europeans pay."), the real concern is the long-term strategic problem of propping up evil regimes that at best suppress democracy and at worst slaughter their people.

Boot's suggestions:

there are some unilateral steps we can take: Drill in the Arctic National Wildlife Refuge. Ease restrictions on building new refineries and pipelines. Eliminate the 57-cent-a-gallon tariff on ethanol imports made from Brazilian sugar cane. Increase federal funding for research and rollout of fossil-fuel substitutes such as hydrogen, cellulosic ethanol (produced from grasses and agricultural waste) and plug-in electric engines.

The most important step would be to increase the federal gasoline tax, currently a paltry 18.4 cents a gallon. Congress should enact a sliding-scale tax that rises as oil prices fall and vice versa. That would shape demand, which would in turn shape prices. The goal would be to create a "floor" at, say, $50 a barrel, which would avert the kind of precipitous price collapse that in the past has eviscerated investment in alternative energy sources and kept low-cost oil producers such as the Saudis and Russians in the driver's seat.

Normally, I'm a free market libertarian type. But I think Boot has it right here. It is of vital importance for the US to undermine the remaining dicatatorial hold-outs and push them into the globalizing world, and the only way to do that is to deprive them of the cash that feeds their power. Of course, passing the gas tax suggested would be nearly impossible for a Congress driven by electoral needs and terrified of voter backlash. It will take real leadership from the top to accomplish any meaningful changes in the American oil dependency; unfortunately, it's doubtful Bush has such leadership in him.

UPDATE: Here's an excellent example of why government is likely incapable for dealing with this problem. Transportation Secretary Norman Mineta notes that it could take two years just to raise the fuel mileage standards for the US auto fleet. Two years!!! You'd think that Congress could move a bit faster, but no. Apparently, raising those fuel standards is just as difficult a problem as sending a man to the moon. According to Mineta: "It will take time. It will be like President John F. Kennedy's call to get to the Moon. It still took 10 years to get to the Moon, but the urgency was to start. We're in the same position." If he's right, and nothing our government has ever done gives me any reason to doubt him, there's just no way this problem will ever be addressed.