Dependence on <i>Foreign</i> Oil

Is the fact that something is "foreign" important in discussing its merits? I frequently hear discussion about foreign oil, and how if we drilled more domestically, we could end our dependence on it. Oil well" alt="" />

Certainly, many are opposed to oil in general - and that's a different discussion entirely. And certainly, drilling it domestically would create jobs. And if there's oil to be had, why not have at it. It's just that I sometimes get the feeling that people think that if only WE had the oil fields, the price would somehow magically drop - we couldn't be held ransom by the Saudi's or OPEC. I think this is silly.

Many people don't realize that part of the reason oil is so expensive is that it's so useful. I'm willing to pay so much for gas because it empowers me to do so much (it expands my choice in neighborhoods, jobs, and vacations to name a few). Moreover, in some ways the oil producers aren't the ones setting the price, the consumers are. Because there's only so much oil (and hence gas) to be had, not everyone can have as much as they want for every whim. If gas stations gave away gas, or charged 50ยข a gallon, they'd run-out in no time. It's the consumers who feel that they really need oil (or gas) that express this by offering more, or rewarding distributors that conserve (by not just giving away oil/gas willy-nilly). If they didn't do this, oil prices would be down in the dirt (with the oil). It doesn't matter where the oil comes from. It's valuable, and people want it enough that they're willing to bid-up it's price.

Actually, my guess is that if oil was only available domestically, we'd probably be paying more for each barrel. Because of a lack of foreign competition, it would only be a matter of time before government started its process of increasing regulation on the industry (raising entry-costs for any prospective competitors), and perhaps eventually instituting price controls (with maximum and minimum prices per barrel). Lower prices would discourage exploration and lead to shortages. This is not rocket science, it's simple logic we've seen play-out in many other industries.

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