Thursday, August 14, 2008

Remember WMDs in Iraq

In the Oil Econ 101 post at Econlog, the issue of foreign oil revenues sponsoring terrorism arises as it often does (though it is not the subject of the post). National security, be it sugar or oil, is the always the last resort for protectionists. Unlike sugar, oil seems to hold more traction because people know where the 9/11 terrorists came from and where the oil comes from. I have two questions for those energy protectionists:
  1. Is there any evidence oil revenues are a major source of funding? What is the terrorist funding elasticity of oil revenues at the current margins?
    A fellow economist who has expertise on this issue tells me no, but I can't get ahold of him to obtain permission to cite him here. Before you dismiss or laugh off absence of evidence, as is usually the response I get when I bring this up, refer to the title of this blog post.

  2. Even if #1 is true, does it make sense that we would be better off in terms of national secuirty if we were energy independent?
    Dependence works both ways, we depend on them for supply, they depend on us for demand. It seems to me that the political elite in much of the Middle East have a very strong incentive to see our continued survival.

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