A Dagger in the Heart of America
By Bryan Caplan
As late as 1999, it was our single largest foreign supplier of oil. But then a hostile regime took over, struck up close friendships with our bitter enemies, and started strangling our economy. By 2003, it had cut its exports by 22%. Clearly, we can no longer “leave well enough alone” in this geopolitical hotspot.
It is time to get tough with the dagger in the heart of America: Venezuela.
The data is all at the Department of Energy website. From 1995 to 1999, the U.S. got more oil from Venezuela than from any other country in the world. But socialist Hugo Chavez came in power in 1999, and in the wink of an eye oil exports to the U.S. started to drop. The numbers:
Year Daily Venezuelan Exports to U.S. (in 1000’s of barrels)
Chavez has even threatened to cut off all oil exports to the U.S. if we don’t stop meddling in his country’s affairs.
I’m pretty sure that if this happened in Saudi Arabia, there would be a foreign policy panic. If the decreased flow followed a fundamentalist take-over, Chicken Littles would be all over the news. But when a socialist and admirer of Castro takes over in Venezuela, we yawn.
And yawn we should. Chavez has been terrible for Venezuela. (And it would be far worse if the high world price of oil weren’t compensating for his disastrous polices). But U.S. oil imports as a percentage of GDP are pretty trivial. $132 billion on oil imports in 2004 divided by around $11 trillion GDP is about 1%. And of course, when one country sells us less, we don’t necessarily cut back at all. There are lots of fish in the sea, and lots of sources of oil in the world economy.
I’ve often heard the quip, “If the main export from the Middle East were bananas, we could stop worrying about them.” It wouldn’t surprise me if most Americans thought the top export of Venezuela were bananas! It doesn’t matter. They sell us less oil, the U.S. government does little about it, market prices adjust, and we get on with our lives.
On the other hand, if you think me a naive economist who knows nothing of foreign affairs, perhaps we should get tough on our current Number One foreign oil supplier.
Yes, you know who it is: Canada.