Mankiw then links to this post on Econbrowser:
If we could wave a magic wand and costlessly reduce the need for imported energy, that would be great. Calls for energy independence are usually followed by magic-wand-like claims about what conservation, technology, etc. are likely to produce. But politicians rarely suggest that Americans make significant economic sacrifice for purposes of energy independence. The rhetoric is usually hollow.
This is, in my view, fortunate. Hollow rhetoric is less worrisome than substantive, misguided rhetoric. Another word for "independence" is "autarky." While gasoline taxes can be justified as a policy to deal with externalities, "energy autarky" is not in itself a desirable goal.
This issue highlights one of the key insights I've learned from studying economics --- no matter how passionately we desire to affect changes in the world, we are extremely limited in our capacity to do so. You could think of this as mankind's lack of omnipotence.
...it is worth pointing out that, even if the U.S. somehow were to achieve energy self-sufficiency, that would not be the same thing as energy independence. It is hard to envision an arrangement that could effectively decouple the price of oil in the U.S. from that elsewhere in the world, even if our imports were zero. As a result, even if we were importing no oil from Saudi Arabia, I would expect a disruption in Saudi production to still have a very dramatic effect on the price that consumers pay in the U.S.
It is very easy to think in terms of how the world "should be" and assume that instantaneous changes in laws and trade would reshape the world in the ways we desire. However, the world is far more complicated than this and people have an uncanny ability to respond to new circumstances in ways we do not intend or anticipate.
History is full of examples of good intentions gone astray. Communism got its foothold by promising an economic utopia here on earth, yet it ended up bringing about more deaths than perhaps any other system in the history of man. We all know where the road paved with good intentions leads...
Questions: Why is energy independence considered a good thing? Is it to keep down the variance in gas prices for American consumers? If so, wouldn't the current variability be better if it kept prices in a lower range than permanently higher prices under "energy independence"? How might we achieve lower prices in an economically viable way? Does the current balance of imports and domestic oil production, while perhaps being imperfect, represent the optimal trade-off given today's political and economic environments around the world?
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