There Ain’t No Such Thing As Free Energy Independence

by Don Boudreaux on July 26, 2010

in Economics, Energy, Myths and Fallacies, Reality Is Not Optional, Seen and Unseen, Trade

Here’s a letter to the Wall Street Journal:

Like New York Times columnist Thomas Friedman, Gilbert Mathis wants government “to launch a Manhattan-type project to make our nation energy self-sufficient” (Letters, July 26).  Even if such an achievement is possible, and even if it would prove to be worth its costs – two big ‘ifs’ – “energy independence” is unlikely to allay one of the chief concerns of its champions.  Americans would still be critically dependent upon foreigners for other things of value.

Achieving energy independence in the U.S. would require Americans to gain a comparative advantage at producing all forms of energy.  But as every ECON 101 student learns, to go from having a comparative disadvantage to having a comparative advantage in one industry means that a country goes from having a comparative advantage to having a comparative disadvantage in some other industry (or industries).  Looked at differently, energy independence would mean that resources now used in other American industries – for example, in agriculture, aviation, or biotech – would shift into American energy industries.

Americans would then become more dependent upon the likes of foreign food suppliers, airplane builders, and pharmaceutical companies.  And it’s not at all clear that such “dependence” would be any better (or worse) than dependence on foreign oil suppliers.

Sincerely,
Donald J. Boudreaux

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