The Ethanol Papers - Paperturn manuscript - Flipbook - Page 311
ports, and shipping lanes (West, 2005). In short, whatever security our
military presence provides (and many analysts think that our presence
actually reduces security; see Jervis, 2005) would be provided by incumbent producers were the United States to withdraw. That Saudi Arabia and
Kuwait paid for 55 percent of the cost of Operation Desert Storm suggests
that keeping the Strait of Hormuz free of trouble is certainly within their
means. The same argument applies to al Qaeda threats to oil production
facilities. Producer states have such strong incentives to protect their oil
infrastructure that additional Western assistance to do the same is probably unnecessary. Although terrorists do indeed plot to disrupt oil production in Saudi Arabia and elsewhere, there is no evidence to suggest
that producer-state security investments are insufficient to protect their
interests. The U.S. oil mission is thus best considered a taxpayer-financed
gift to oil regimes (and, perhaps, the Israeli government) that has little, if
any, effect on the security of oil production facilities or, correspondingly,
the price of oil. One may support or oppose such a gift, but our military
expenditures in the Middle East are not necessary to remedy a market
failure.”
My response in 7b answers all this. But in addition, if all of our efforts and expenditures were unnecessary, as you set forth, that doesn’t mean that we didn’t
spend billions/trillions on this particular oil and gasoline subsidy, it just means
that it was another ill-advised subsidy going to the oil/gasoline industry.
8. You wrote: “Does Western reliance on oil put money in the pocket of
Islamic terrorists? To some degree, yes. Does that harm Western security? Probably not - at least, probably not very much. Before we go on, it
is worth noting that only 15.5 percent of the oil in the world market is produced from nation-states accused of funding terrorism (Lundberg Survey,
2006). Hence, the vast majority of the dollars we spend on gasoline do not
end up on this purported economic conveyer belt to terrorist bank accounts. Regardless, terrorism is a relatively low-cost endeavor and oil
revenues are unnecessary for terrorist activity. That a few hundred thousand dollars paid for the 9/11 attacks suggests that the limiting factors for
terrorism are expertise and manpower, not money. This observation is
strengthened by the fact that there is no correlation between oil profits
and Islamic terrorism. In Taylor and Van Doren (2007), we estimated two
regressions using annual data from 1983 to 2005: the first between fatalities resulting from Islamic terrorist attacks and Saudi oil prices and the
second between the number of Islamic terrorist incidents and Saudi oil
prices. In neither regression was the estimated coefficient on oil prices at
