How to Escape the Oil Trap

If I could change one thing about American foreign policy, what would it be? The answer is easy, but it's not something most of us think of as foreign policy. I would adopt a serious national program geared toward energy efficiency and independence. Reducing our dependence on oil would be the single greatest multiplier of American power in the world. I leave it to economists to sort out what expensive oil does to America's growth and inflation prospects. What is less often noticed is how crippling this situation is for American foreign policy. "Everything we're trying to do in the world is made much more difficult in the current environment of rising oil prices," says Michael Mandelbaum, author of "The Ideas That Conquered the World." Consider:

Terror. Over the last three decades, Islamic extremism and violence have been funded from two countries, Saudi Arabia and Iran, not coincidentally the world's first and second largest oil exporters. Both countries are now awash in money and, no matter what the controls, some of this cash is surely getting to unsavory groups and individuals.
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But America remains the 800-pound gorilla of petroleum demand. In 2004, China consumed 6.5 million barrels of oil per day. The United States consumed 20.4 million barrels, and demand is rising. That is because of strong growth, but also because American cars—which guzzle the bulk of oil imports—are much less efficient than they used to be. This is the only area of the American economy in which we have become less energy-efficient than we were 20 years ago, and we are the only industrialized country to have slid backward in this way. There's one reason: SUVs. They made up 5 percent of the American fleet in 1990. They make up almost 54 percent today.

It's true that there is no silver bullet that will entirely solve America's energy problem, but there is one that goes a long way: more-efficient cars. If American cars averaged 40 miles per gallon, we would soon reduce consumption by 2 million to 3 million barrels of oil a day. That could translate into a sustained price drop of more than $20 a barrel. And getting cars to be that efficient is easy. For the most powerful study that explains how, read "Winning the Oil Endgame" by energy expert Amory Lovins (or go to oilendgame.com). I would start by raising fuel-efficiency standards, providing incentives for hybrids and making gasoline somewhat more expensive (yes, that means raising taxes). Of course, the energy bill recently passed by Congress does none of these things.

We don't need a Manhattan Project to find our way out of our current energy trap. The technologies already exist. But what we're searching for is perhaps even harder—political leadership and vision.
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Good article by Fareed Zakaria. Spot on man! I hope you don't get mesothelioma!

Hope you are all well! I'm off to Buenos Aires again next week. Anyone want anything?

Charlie