IMPORTING OIL, MONEY HURTS U.S.
BY TERRY SAVAGE Sun-Times Columnist Nov 5, 2009
Updated: May 3, 2013 12:15PM
Q.What is your greatest concern for America's financial future?
A. On a national basis, the two worries that rise to the top of my list (among many others) are the twin dangers of our growing dependence on imported oil and on imported money to fund government spending. Even worse, we import both from countries that are not our friends. Here's a quick look at the basics of each situation.
Danger of our national debt
Almost every year, the U.S. government spends far more than it takes in through tax revenues. In the fiscal year just ended, our government spent about $1.8 trillion more than it collected -- a record budget deficit. The sum total of all our deficits, going back through the years, is our national debt. It is approaching $8 trillion dollars. That's money we borrow by selling IOUs -- Treasury bills, notes and bonds.
The real problem with all that debt is that 47 percent of it is owed to foreigners! Nearly half our debt is owned by foreign central banks, including China -- one of our largest creditors. They have lots of dollars -- money we've sent to them as we purchased their consumer goods. So far, the Chinese and others have been willing to lend us money, buying our Treasury bills, notes and bonds, at the current very low interest rates. But what happens when they see the U.S. is also creating more dollars -- inflation -- to help pay its bills?
At some point, those lenders are going to suggest that they would like higher interest rates -- or some other important concessions -- in order to keep lending us money to finance our government spending.
And that will be a critical moment -- when our lenders start making demands! We give away our future freedoms when we grow indebted to those who do not necessarily have our best interests at heart.
Danger of imported oil dependency
The second great dependency is on imported oil. The statistics are frightening. In the United States, we use 21 million barrels of oil a day. Of that amount, 13 million barrels are imported. In fact, the United States, with only 4 percent of the world's population, uses 25 percent of the global supply each day!
This huge financial issue came into focus recently when I heard legendary oilman T. Boone Pickens speak about our vulnerability. Before you jump to the conclusion that the view of an "oilman" might be self-serving, the reality is quite the opposite.
Pickens has spent more than $62 million of his own money trying to educate Washington leaders in both parties to the dangers of U.S. dependence on imported oil from countries that are potential enemies. He has backed everything from wind power to solar to geothermal to natural gas (which we have in great abundance) as alternatives to importing oil. Pickens says the world sees it as both piggish and foolish -- using too much oil, and not demanding enough from the countries we protect. While the Chinese buy up reserves around the world -- and even have a deal with Iraq to develop their oil fields -- the U.S. has nothing to show for the lives lost and the money spent in that country!
Pickens is doing more than complaining. You can find his suggestions and join his attempt to inform Congress at www.pickensplan.com/theplan/.
One central aspect of Pickens' solution is to offer immediate tax credits to move our nation's fleet of more than 6 million 18-wheel trucks from diesel to natural gas fuel. Because about about 5 million of the 13 million barrels we import daily come from OPEC, a switch to natural gas as truck fuel could cut our dependence on OPEC in half! America is overflowing with new natural gas discoveries that have pushed its price down to record lows compared with oil. We would cut our dependence on foreign oil -- and our vulnerability to sworn enemies and fickle friends.
The greatest fear
These two growing dependencies -- on imported money and imported oil -- top my greatest fears for the future of our free enterprise system. The truly sad thing is that we could solve these problems if only our representatives in Washington -- in both political parties -- would focus on these dangers. And that's The Savage Truth.