I can’t turn on the television these days without hearing some politician advocating the achievement of energy independence. Not a single time have I heard one pushing for banana independence. Yet we import all our bananas from foreign countries and some of them don’t like us all that much.

The only half-way valid argument for energy independence is national security. If our foreign sources of oil were cut off we could be practically dead in the water after our strategic petroleum reserves are exhausted. For that reason we should be preparing all our known oil fields for production and exploring for more. We should also be developing alternative sources of energy.

But there is no reason to stop importing foreign oil as long as its price is competitive with domestically produced oil. It makes sense to me to keep using the foreign oil as long as we can get it and afford it, and save ours for later. That is, use theirs and hoard ours. If foreign oil becomes unaffordable and threatens our economy we could increase domestic production to hold the price down.

The politicians also rant about the hundreds of billions of dollars we are sending to the Middle East each year to satisfy our “addiction” to oil. They speak as if the money is being poured down a rat hole. Actually, if the foreign recipients of our dollars are pouring them down a rat hole or storing them in a vault, the oil we get from them is effectively free. We could just print more money to replace what they are holding.

But that’s not how it works. We engage in a voluntary transaction with the foreigners in which we get oil and they get US dollars. The only place on the planet where US dollars can be redeemed is in the US. The dollars that they accept in exchange for their oil are effectively promises that they can come to the US later and exchange them for goods, services or property. They may choose to trade the dollars to some other country but that country still has to spend the dollars in the US. So, in the end, all that money sent abroad has to eventually come back and when it does it creates commerce (and jobs) here. This is true of all other forms of foreign trade as well.

This process still might work to our disadvantage if we pay too much per barrel of oil. We were recently paying about $140 per barrel. A Saudi could (but probably wouldn’t) stay overnight in a decent hotel in the US for that amount. We get about 20 gallons of gasoline and numerous side products from the barrel of oil. Is that a good trade? I don’t know but a free market will.

Energy independence sounds good but let’s not go there as long as foreign oil is comparable in price to domestic oil and we are ready to tap into our known deposits in case of a national emergency.

In an article on drilling activity off Florida’s Northwestern shore the AP quotes our bonehead senator:

U.S. Sen. Bill Nelson, who has led opposition to offshore drilling among the state’s Congressional delegation, criticized the governor for reversing his position, accusing Crist and McCain of putting oil company profits before protecting the state’s $65 billion annual tourism industry.

“Oil companies and their allies are using the shockingly high price of oil and gasoline, which largely is the result not of a supply problem but speculative fever, to scare the public into thinking coastal drilling offers a real solution to our dependency on oil,” he said in an e-mailed statement.

Where do I start?

How does Nelson know that Crist and McCain are putting oil company profits before protecting the state’s tourism industry? I would guess that they might be thinking of taking some action to mitigate this energy crunch somewhere down the road, instead of bowing to the environment prophets several times a day.

I suppose it hasn’t occurred to Nelson that tourists need lots of fuel to get to Florida’s attractions. Higher and higher priced fuel will kill the tourism industry a lot quicker than a few oil spills. Anyway, when did the government become responsible for protecting the tourism industry?

So, Senator Bill thinks there is no oil supply problem and that the “shockingly” high prices are due to speculation. It would be great if he’s right. That would mean that the market will collapse soon and prices will fall dramatically. How does he think speculators can sustain control of a gargantuan market in which supply exceeds demand? They might be able to do it for a short time but the wealthiest people on this planet would eventually have an overwhelming cash flow problem, including the oil producing monarchies and dictatorships. After hearing talk in the US about opening up oil exploration the Saudis reversed themselves and agreed to increase production; the slightest hint of less demand for their oil spurred them into action.

The power and influence of speculators is way oversold. Look at what just happened in the housing industry. Yes, they helped drive up the price of homes, but they couldn’t sustain it. Eventually the market collapsed and they lost their shirts. Look at what happened in the high-technology industry in the late 90s. Speculators went crazy investing in start-up companies but the market couldn’t accommodate their fervor, so many of them went bankrupt. Listening to the leftist media you would think that all speculators are guaranteed wealth. Not so. Even the successful ones lose money almost as often as they make money.

Coastal drilling may not offer “a real solution to our dependency on oil” and it may not offer a complete solution, but I think it would really help a lot while we look for that real solution. What doesn’t help is for one of our supposed leaders to keep spewing politically convenient crap when others are trying to seriously debate the viability of proposed solutions.

The Associated Press reported last week that “Democrats celebrated a step toward reducing U.S. dependence on oil as the Senate approved a bill calling for more ethanol and the first boost in gas mileage in decades.” What the Democrats are really celebrating is their move to micromanage the energy market. They would like to micromanage all the markets. That way they can get more campaign contributions from all the industries that want to play in their markets.

We don’t need additional controls on the energy market, we need fewer. If the government would get out of the way private industry and a free market would eliminate any energy problems. The government is currently preventing the building of nuclear power plants, preventing the development of new domestic oil fields, and preventing the building of new oil refineries. Right here in my state Senator Mel Martinez boasts frequently about ‘protecting’ our gulf waters from becoming oil fields. There is no pressing need to reduce our dependence on oil in general; what we need is to reduce our dependence on foreign oil.

There is no real environmental gain from using ethanol instead of gasoline. The only benefit from ethanol is that it can be produced domestically and, therefore, reduces to some extent our dependence on foreign oil. We should welcome the development and production of alternative energy sources like ethanol, but leave them to the free market. If there is demand for ethanol someone will supply it. And there will be demand for it when oil prices get high enough. But ethanol is not the final answer.

The ultimate renewable energy source is the sun. When the sun stops shining we won’t need any more energy. If the government wants to sponsor some far-term basic research into new sources of energy it should put its money and effort into developing revolutionary ways of capturing solar energy. I’m not talking about capturing it through the production of corn and then extracting energy from the corn. I’m talking about more direct methods like the current use of solar cells to produce electricity. There has to be some breakthrough solution out there; we just need to get enough of the right people thinking about it.

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The Senate bill calls for price gouging provisions that make it unlawful to charge an “unconscionably excessive” price for oil products, including gasoline. Are they kidding? How do they expect to measure what is unconscionably excessive? Some court will throw that out the first time it is challenged. Perhaps they know that and are just trying to make some political mileage.

When the British hostages are recovered from Iran, Britain should immediately launch an attack against Iran. They should punish them severely from the air and sea and then quietly withdraw. Iran should not be allowed to take such a hostile action without consequences. Britain should not accept the humiliation that the USA accepted (that is, Jimmy Carter accepted) during the embassy hostage situation in 1980. If we had retaliated appropriately then (yes, Ronald Reagan could have done that after he took office in 1981), Iran might not be the troublemaker that it is today.

Whether or not the Brits wandered into Iranian territory is irrelevant. Rational nations don’t initiate international incidents over miscalibration of GPS devices. If the Iranians sincerely believed that their GPS coordinates were correct and the Brit’s were wrong, then a simple warning to the Brits on-scene should have been sufficient to deal with the breach. It is clear that the Iranians wanted to provoke an incident.

Since this is a maritime incident, Iranian ports would be appropriate targets for the attack. But no, they can’t do that because it might disrupt the flow of oil from Iran. In fact, attacking any target in Iran might provoke them to shut off the flow of oil to Western Nations. Maybe the Brits aren’t willing to be held hostage to their thirst for oil. But many in the USA would rather have pretty beaches than energy independence. Maybe the Brits will have the courage to weather some short-term consequences of an attack to gain the longer-term benefits. After all, Iran is as dependent on selling its oil as the West is on buying it.

Senator Mel Martinez vows to fight a proposal to drill for oil and natural gas off Florida’s coast. Here is his press release:

March 13, 2007 – Washington, DC – U.S. Senator Mel Martinez (R-FL) today issued the following statement in response to the announcement of a new effort to open oil and natural gas drilling off of Florida’s coastline. Senators Byron Dorgan (D-ND) and Larry Craig (R-ID) have announced legislation to open offshore drilling as close as 45 miles to Florida’s coast, including Cuban waters for U.S. competition.

Senator Martinez said:  “This is bad policy. It attacks Florida’s protections, it violates the embargo with Cuba, and it would put drilling rigs in the Gulf military training area. This proposal goes back on everything the Congress dealt with last year – everything we did to create a long-term buffer for Florida. I will fight this proposal every step of the way.”

The bad policy is Martinez’s ‘not in my back yard’ policy. Florida uses oil and natural gas so why shouldn’t it bear it’s share of the burden of producing it? There’s a lot of talk about becoming less dependent on oil from the middle-eastern countries but very little action.

How many people want an embargo with Cuba to stand in the way of less expensive fuel? Does Martinez think that relations with Cuba are more important than the availability of energy?

The “Gulf military training area” is not a critical issue. The military can continue most of the training and testing exercises in the presence of oil rigs and move the others farther into the Gulf. Anyway, the Air Force wants to move much of the testing now done at Eglin AFB to California.

Most of those who oppose off-shore drilling say that it will spoil the beautiful coastline. They talk about the chance of oil spills and the ugly, polluting industry that supports the drilling and processes the oil and gas from the off-shore wells. They want you to believe that all the tourists that now visit Florida will immediately leave and never return if we allow the oil and gas industry to come in. This is just a smokescreen for their real agenda: thwarting all new industrialization in general and energy production in particular. I say ‘energy production in particular’ because it supports other industries.

Florida also discourages on-shore drilling. An exploration company is planning to drill a well here in Northwest Florida about 25 miles inland from the Gulf of Mexico. A company representative told me that they have encountered a lot of roadblocks in the state permitting process. He said that process has become one of the major expenses in exploring for new oil and gas fields in Florida.

(Full disclosure: I have a very small financial interest in the proposed inland well. My only interest in the off-shore drilling is to keep oil and gas available at the lowest possible prices.)