A disruption in the supply of oil could cause serious problems for the United States economy. Rather than an actual dependence on foreign oil, the supply of oil and the price increase that would happen as a result are actually a “national security” problem.
Keith Crane, a senior economist at Rand said that a drop in the supply of oil across the globe would start a rise in oil prices and “significantly affect the United States, no matter how much or how little oil the United States imports.”
The Rand study looked at links between oil and national security.
We have already seen what can happen if the price of oil goes up 100% from where it is right now, to back over $4 a gallon; everything gets more expensive, not just oil. The problem with that is if something were to happen now, many wouldn’t be able to afford anything. In a worst case scenario, more people would go unemployed because they simply could not afford to even make it to work.
There were moderate risks included with the benefits from higher revenues to oil exporting countries such as Venezuela that can be seen as rogue countries. Of course there is always a risk associated when you’re talking about countries like Venezuela or Iran; the countries have a long track record of being outrageous and hasty in decision making. More money means that they can do more irrational things. Higher revenues to organizations such as Hamas and Hezbollah would also cause quite a problem due to terrorist activities.
There were four policies recommended by the researchers to help with the global supply of oil if something were to happen. First, to impose a form of price control or rationing during a supply disruption, then examining domestic oil fields that have been off-limits in the past, helping develop green, alternative energy, and keeping the price of such forms of energy low when compared to the price of oil, and finally to impose an excise tax on oil that would help try to minimize the growth in demand for oil.
As I said, the last time a spike in oil happened, it was right before the economy really went south (even though we were already technically in a recession). Since then, oil prices have fallen dramatically, and while gas is back above $2 a gallon, it is still much easier to stomach than gas above $4 a gallon.