But once oil is in the global marketplace, there is no way to keep it from the United States, even in the teeth of a direct boycott. As MIT’s Thomas Lee, Ben Ball, Jr. and Richard Tabors have written, “it was no more possible for OPEC to keep its oil out of U.S. supply lines [in 1973] than it was for the United States to keep its embargoed grain out of Soviet silos several years later. The embargo was circumvented by simply rerouting through the international system. The significance of the embargo lay in its symbolism.”
Moreover, the world’s economy is far less dependent on Middle Eastern oil today than it was in the 1970s. In 1973, 37 percent of the world’s oil came from Persian Gulf nations; today, only 28 percent does. Fully 82 percent of America’s imported oil comes from nations outside of the Persian Gulf. We would have plenty of other sources to turn to in case of any Persian Gulf boycott or temporary regional supply disruption, particularly given the increasing amount of unutilized oil production capacity in non‐OPEC countries.
The world, furthermore, is swimming in an historic glut of oil. Due to exponential advances in production technology and energy efficiency, the price of gasoline today — after adjusting for inflation — is less than it was in the late 1960s. It takes far less oil to produce a dollar’s worth of goods and services in today’s economy than ever before. Simply put, oil in the ground is a depreciating asset.
Contrary to popular opinion, oil prices are simply not that important to the overall economy. Only 2 percent of our gross domestic product (GDP) is spent on petroleum. Economist Douglas Bohi calculates that the petroleum shortages of the 1970s reduced the nation’s GDP by only 0.35 percent. Many economists now agree that wage and price controls, inflationary monetary policy and economic mismanagement large and small by the Nixon, Ford and Carter administrations were the root cause of the economic downturns of the 1970s. Both political parties, however, found it useful to blame OPEC for the economic mistakes of their party leaders.
How many innocent civilians should we be prepared to sacrifice in order to keep gasoline prices from rising a dime a gallon? Fortunately, the answer is “none.” Oil will be there for us at affordable prices no matter how anti‐American the master of the oil fields may be. There might be reasons to risk catastrophic and routine terrorist attacks in the United States (reasons, I might add, that are increasingly dubious by the day), but oil sure as heck is not one of them.