THE BLOG
02/05/2006 05:56 pm ET Updated May 25, 2011

The Deep Downside to High Oil Prices

Oil prices are but a few dollars from their all time highs of $70.85 per barrel achieved in the wake of Katrina and seem to be on an inexorable march to these levels again and beyond. The impact of these prices on our economy, on the wealth of the OPEC nations and the bottom line of oil companies large and small is widely known and has been widely written about.

What is not so widely understood is the impact these high prices are having in sustaining and bolstering America's adversaries around the world, most especially the likes of Iran, Syria, Sudan, Venezuela while providing "walking around money" to radical elements in Saudi Arabia, Kuwait, etc. According to the US intelligence community it is also increasing Russia's leverage in eastern Europe and on the world stage.

Within days of President Bush's call to Americans to end their addiction to oil, the nations director of national intelligence, John Negroponte stated that the rising demand for energy and instability in oil producing regions "is increasing the geopolitical leverage of key producing states".

Singling out Iran, Mr. Negroponte acknowledged it was growing in power. Indeed the regime today is more confident and assertive than it has been since the early days of the Islamic Republic" citing record oil revenues and diversification of its trading partners were further strengthening the Teheran government.

And, of course high oil prices have also permitted President Hugo Chavez of Venezuela to widen his influence in Latin America, while high profits from oil and gas had similarly boosted Moscow's confidence and assertiveness.

All this and much more. On the same day that the director of national intelligence made his observations, our Defense Secretary Donald H. Rumsfeld was quoted as saying, "The enemy -- while weakened and under great pressure -- is still capable of global reach, still possesses the determination to kill more Americans, and still trying to do so with increasingly powerful weapons"; that despite progress in fighting terrorism, the threat today may be greater than ever before because the weapons available are far more dangerous.

"They will either succeed in changing our way of life, or we will succeed in changing theirs" he declared.

Our "addiction to oil" and the resulting high prices has clearly become a matter of critical national security concern. Wind power, switch grass, hydrogen cars, clean coal, ethanol from woody crops, etc. are all well and good, but they will take time.

It is becoming imperative that action be taken on the demand side of the supply/demand equation. It is time, it is overdue, that our government imposes real limits to our unfettered consumption of energy, and to do it now. To do it in a way that makes a meaningful and immediate difference to the construct of the oil market permitting us to regain control of our national and foreign policy, to regain our self respect, and to permit us to deal with the issues at hand. Anything less, given the pevasive dangers lurking, will be a dereliction of duty and a betrayal of future generations.