First law of petropolitics
This was something Tom Friedman put forward during the first session of today’s PSD Forum. To paraphrase: the pace of freedom in oil producing countries and the price of oil move inversely. He backed this up with some interesting examples and facts. For these, and the other laws, see the next edition of Foreign Policy when it comes out. He only gave us a small peak.
Cho Khong of Shell agreed with Friedman, though chose to talk of ‘political reform’ instead of ‘pace of freedom.’ For example, he pointed out how periods of high growth and reform in Indonesia coincided with the periods when the price of oil was lowest and technocrats where hence necessarily brought into office.
Update 1: Video from the session is now online.
Update 2: The Foreign Policy article is out. Also see this note from the Dallas Fed on how economic freedom effects oil supplies.
Update 3: Video and transcript from First Law of Petropolitics event at the Carnegie.
Update 4: Friedman discusses petropolitics and global corruption on NPR.
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The price of oil is a major figure on a political arena. That's why alternative sources are not being quicky discovered.
Posted by: First aid nurse | Apr 21, 2006 6:37:47 AM
Hi,
That was a scam and not an article. Thomas Freedman is trying to tell the world that if you can make money you are a bad guy .... it sounds like old comminist ideas. Isn't rediculous that Mr Freedman is swimming in an unfamiliar water for him. He was talking about correlation ... I am a Six Sigma Master Black Belt (I hope Mr Freedman have heard about this) and I can tell you that his theory is CRUB (mathmatically speaking). So Mr Freedman, this is just another stupid idea coming from another stupid american .... like the world is flat .....
Posted by: Driss Hammami | May 5, 2006 2:05:47 AM
I would have to disagree with Driss. I really liked this approach by Friedman. While I agree that the data is anectdotal at best - it is still very intersting. I really liked Chong's response in the video clip as well...
Posted by: T. Irwin | May 5, 2006 10:16:41 AM
I preffered the Dallas paper to the FP one. Less fluff.
Posted by: Sole | May 5, 2006 10:17:19 AM
ON THE FIRST BLAHW OF PETROPOLITICS
I normally enjoy reading Thomas L. Friedman’s articles and I envy the quality of his pen but frankly, his recent “The First Law of Petropolitics”, Foreign Policy, May/June 2006 reads like what we in Venezuela refer to as “discovering the tepid water”, discovering common knowledge, although, in fact, if he really feels that he must advice his own government “that the price of crude should now be a daily preoccupation of the U.S. secretary of state, not just the treasury secretary” then I can only conclude that the USA has a much more serious problem than oil. Of course to place huge oil income directly into the pockets of the politicians in countries with weak institutions, will distort their minds and make them act like bullies, what’s new?
Friedman also thinks he makes an important point concluding in reference to consumer countries such as the USA that “we can affect the global price of oil by altering the amounts and types of energy we consume” which is of course also very correct. But, where he goes absolutely wrong, and in his bio we see no reference to studies in economy, is when he says “we cannot affect the supply of oil in any country”. Of course you can! That day consumer countries would be willing to guarantee a decent price for oil over a long period, well that day producers would immediately produce more but, while what the consuming nations really seem to be looking for is oil at the $5 per barrel predicted by the prestigious The Economist as late as in March 1999, then you can obviously only expect to be creating the conditions for oil at over $100. Want to help? Then ask your treasury secretary to offer good long term prices for oil, subject that most of the revenues are distributed directly to the citizens of the producing country.
By the way, and back to the demand, what is currently on the board for fighting USA’s oil addiction seem just like nicotine patches and chewing gums for a non meant new-year promise, and will only serve to guarantee that the modern day successors of Mark Twain will also be able to argue that “it is easy to quit, as they have done it a thousand times”. Instead, $7 per gallon, that should indeed do it!
Levying a new federal consumption tax on gas that would increase its price to about the level at which it has been in Europe, would reduce demand for imported oil, provide the government with about $300 billions in taxes to balance the accounts and benefit the environment. Yes, it would destroy many jobs, but it also would create new ones. Better to bite the bullet now before the current economic imbalances erode confidence in the dollar, and anyhow take the price to $7 but then, with no gain to pay for the pain. That, of course, would require leadership, which is even scarcer than oil.
Posted by: Per Kurowski | May 20, 2006 1:11:31 PM
If the price of oil affects not only economic interest but personal freedom throughout the world, shouldn't the US begin to allow exploration and drilling offshore on the east and west coasts? Why not give some more push to nuclear energy? Is the risk of pollution more important than the risk of loss of freedom? Shouldn't the US government fund or offer awards or tax credits for research for alternative energy?
The price of oil is not being treated as if it were an emergency. Shouldn't something be done before it becomes one?
Posted by: Ben Tumer | Jan 23, 2007 11:03:47 AM