Arnold Kling

Oil and Terrorism

Arnold Kling, Great Questions of Economics
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It is common to talk about "reducing our dependence on foreign oil" as a way to fight terrorism. I question that connection in this essay.

If we reduce oil consumption by 10 percent, then we will not cut 100 percent of our imports from Saudi Arabia. We cannot arrange to consume only American oil and no Saudi oil. Oil is oil. If we reduce demand by 10 percent, we probably will reduce our demand for Saudi oil by 10 percent, not by 100 percent.

Discussion Question. Why is a higher gasoline tax less attractive politically than regulations on the fuel economy of SUV's?

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