Exclusively in the new print issue of CounterPunch
HOW MODERN MONEY WORKS — Economist Alan Nasser presents a slashing indictment of the vicious nature of finance capitalism; The Bio-Social Facts of American Capitalism: David Price excavates the racist anthropology of Earnest Hooten and his government allies; Is Zero-Tolerance Policing Worth More Chokehold Deaths? Martha Rosenberg and Robert Wilbur assay the deadly legacy of the Broken Windows theory of criminology; Gaming the White Man’s Money: Louis Proyect offers a short history of tribal casinos; Death by Incarceration: Troy Thomas reports from inside prison on the cruelty of life without parole sentences. Plus: Jeffrey St. Clair on how the murder of Michael Brown got lost in the media coverage; JoAnn Wypijewski on class warfare from Martinsburg to Ferguson; Mike Whitney on the coming stock market crash; Chris Floyd on DC’s Insane Clown Posse; Lee Ballinger on the warped nostalgia for the Alamo; and Nathaniel St. Clair on “Boyhood.”
Save the High Fives

The Downside of Energy Independence

by MICHAEL BRENNER

There is a current of excitement running through the foreign affairs community sparked by the prospect that the United States will cease being a net energy importer within 25 years. The International Energy Agency’s annual WORLD ENERGY OUTLOOK 2012 projects that by 2035 or so, the country will produce enough oil and natural gas to dispense with most foreign supplies. New extraction techniques rather than discovery of new sources is the deus ex machine that is slated to work this startling turnabout.  Were this seeming potential to be realized, some imagine the United States gaining freedom of action in dealing with the oil rich states of the Middle East as well as troublesome commercial partners elsewhere like Venezuela.  We might choose to ignore them altogether. Moreover, as a net exporter itself, the United States could gain leverage on other parties. That is the happy vision that is tantalizing to global strategists.

How justified is this celebration of a euphoric future?  Is it premature? Should we worry about irrational exuberance?

The liberation of America from the coils of world energy politics thanks to a new-found self sufficiency is a nice theme for a magazine cover story. However, it is a gross over-simplification of the still uncertain, and certainly complex realty hat awaits us. Here are a few prudent considerations to keep in mind before jumping to radical conclusions.

First,  energy experts are not of one mind as to the odds on achieving complete
 independence. There are several variables that must be factored
into the equation,  and predictions about most have wide confidence margins. They are technical:  the relative ease of deep water, hydraulic fracturing, and sand tar extraction technologies on a massive scale. They are economic: can oil produced by using these costly methods compete with lower cost oil from traditional sources if world prices drop? They are environmental. They are political: possible domestic political constraints being the most prominent.

Second, there is no readily definable magic threshold beyond which the balance
of dependency between suppliers states and consumer states, and
thereby reciprocal influence, shifts drastically. That is to say, the energy trade, like most international commerce is symbiotic; it has it sown logic. However, the motivations of governments are not solely economic. There are realpolitik and nationalist sentiments at play as well.

Third, the United States’ relations with major suppliers in the Middle East
and elsewhere are multi-dimensional. They involve a host of national interests. Have we forgotten the “war on terror,” “the war on proliferation,” the democracy promotion project and our national dedication to shaping the world’s affairs according to our own lights? Then there is the open-ended commitment to Israel’s security and well-being.

Fourth, in a world of economic interdependence, it makes no sense to speak of
the United States economy as if it were autarkic. So long as other
major economies remain energy dependent, their vulnerability to supply
disruption is our problem as well.  Economic security in today’s world cannot be achieved within one’s sovereign boundaries, by dint of one’s own efforts alone.  There is no such thing as economic security in one country -whatever its energy situation. And energy is still the most crucial element needed to sustain the global economy.

Economic conditions in one country are heavily dependent on economic performance in other major national economies.  If the European Union, Japan, or China experiences a severe downturn, it quickly  will have serious repercussions on the United States. The precise degree of sensitivity to external developments cannot be calculated.  Some countries, e.g. Germany, have a larger share of their economic activity directly associated with imports and exports than some others, e.g. the United States. For the former it is 44%, for the latter it is 16%. But even the United States is unable to insulate itself from macro economic developments among the largest national economies. The global financial crisis of 2008 demonstrated vividly both the fragility of current interdependence, the weakness of coordinating mechanisms, the flawed abilities of their managers, and the swiftness with which seismic effects race around the globe. So, by implication, energy security for the United States encompasses the energy security of the developed world generally – if the measuring rod is performance and stability of the global macro economy.

The last thing we need is another sudden change in the cyclical pattern of 
euphoria and dread that has marked American thinking about its place in 
the world. The vision of energy independence carries that unfortunate potential.

So save the high fives.

Michael Brenner is a Professor of International Affairs at the University of Pittsburgh.