Now, I get that we need energy! It is the lifeblood of our economy and drives the modern world. But, when we realize just how unsustainable -- from a NATIONAL SECURITY point of view (let alone an environmental one) it is to keep this up, suddenly issues like whether we should be moving away from fossil fuels get really clear. Of course we should! We simply can not afford to subsidize the parts of the world that deplore personal liberty while we claim to be its biggest defender.
We secure our own freedom by funding those who oppose freedom. Its just that simple.
To further illustrate why we must make the turn away from hyper dependence on fossil fuels -- see the article below. This is an analysis that should open everyone's eyes -- and makes the point once again that we (Americans) have more in common with each other -- even with our deep political differences, than we often realize. And if we want our country to survive -- whether it is BECAUSE we don't want to fund terrorists or BECAUSE we want to preserve the environment -- the solution is the same -- and it DEMANDS cooperation rather than demonization.
How much oil it'd take to buy the US
At the recent price of $140 a barrel, it turns out to be a mere 400 billion barrels, or just about the combined reserves of Iran and Saudi Arabia.
Most of us view the world through dollar glasses. It's perfectly reasonable. Dollars, after all, are the currency we use in daily life. And those lenses, until recently, were distinctly rosy.
When we asked, "How much is that in dollars?," we usually liked the answer.
But it may be time to ask another question: "How much is that in barrels of oil?"
Trust me, others are doing exactly that.
That's when the world starts to look very different. It also looks more than a little scary to the U.S. Today, the net worth of the entire country is equivalent to a mere 400 billion barrels of oil. That's a smidgeon less than the proven reserves of two Middle Eastern countries: Saudi Arabia (264 billion barrels) and Iran (139 billion barrels).
At more than 40 times its 1970 price, oil has outstripped the value created by a full working generation of Americans in a period of dramatic technological change and innovation. During the same time, the value of American business shares, as measured by the S&P 500 Index ($INX), has risen only about 15 times above its 1970 level.
I find that hard to believe. After all, in 1970 the Internet was only an arcane toy for academics. Computer memory was desperately expensive. Intel had just been formed and was introducing the first dynamic random access memory chip. Bill Gates had yet to enter (or drop out of) Harvard and was five years from founding Microsoft. Steve Jobs was years away from creating the Apple II and was decades from launching the iPhone. AT&T was still a single national company, owning all of the regional Bell companies.
No one was yet thinking the U.S. post office was a quaint institution, soon to be treasured for its many buildings that could be converted to trendy condos. Phone calls were expensive. Sears, Roebuck was an important retail stock, not a real-estate play by a hedge fund manager. All surgery was invasive. And it was still believed that stomach ulcers were caused by stress. Google founders Larry Page and Sergey Brin had not yet been conceived, let alone applied to Stanford, where they would create Google.
All of that dynamism and creativity pale against the price of oil. Looking as far back as 1970, America has never been worth less in barrels of oil.
I learned this by measuring the net worth of all U.S. households and nonprofit organizations in barrels of oil. Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It's the whole enchilada -- all our cars, our houses, our durable "stuff," bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.At the end of March, for instance, our collective net worth as a nation was $56 trillion, the second straight quarter it had dropped. Divide $56 trillion by the recent $140-a-barrel price of oil and you get 400 billion barrels of oil as the value of America, a fraction of our national value in 1998, 1995 or even 1990.
Either oil is too expensive or America is too cheap.
The value of the U.S., in barrels:
|Year||Household net worth*||Price of oil||Barrels to buy America|
*Includes nonprofits. **Through March. Sources: Federal Reserve, Bloomberg.