Sunday, January 20, 2008

More on the National Security Levy

US Senate candidate Jay Buckey was kind enough to comment on my posts below.

Here is the paper that he cites as a reference for the hidden cost of oil, particularly those costs related to national defense. The link brings you to the National Defense Council Foundation, a think tank focused on national security. Look around and you will find the paper.

In principle, as I said in my original post, I agree that some military spending is related to our oil consumption and therefore should be reflected in the price we pay. The questions are of magnitude, how we will impose the tax, and what we will do with the proceeds.

The paper cited by Mr. Buckey has annual oil-related costs of defense of $137.8 billion, which would result in a levy of $18 per barrel given our US consumption of roughly 21 million barrels per day. That is a significant number. There are of course a lot of things to question in the analysis. The biggest issue I have is the idea that we are in the Middle East to protect our oil consumption interests. Unfortunately, the Middle East has the world's cheapest oil reserves, and they are going to be bought by somebody -- if not us, then someone else. Those purchases will result in revenues to governments that are not always friendly to us.

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