The True Cost of $100 Oil
Oil reached $100 a barrel today. What does that really mean?
For starters, since we import roughly 12.5 million barrels a day, it means we are sending $1.25 billion a day to foreign suppliers, including a rogue’s gallery of hostile and chronically unstable countries.
But the true costs are much higher than that. They include staggering capital outflows, oil-related defense
expenditures, lost domestic investment, lost government revenues, and oil supply disruptions. In 2006, that added up to $825.1 billion — twice what we spent on national defense.
Consumers feel the impact whenever they buy an energy-dependent good or service. As the Associated Press
reported last week, that includes everything from milk to clothing to beauty products: Lipstick and other makeup prices are up seven percent over the past 12 months and clothing isn’t far behind. Ouch.
It’s a good thing that Congress and the president had the shared foresight to enact energy legislation in December that guarantees expanded use of renewable fuels like ethanol.
Sources:
United States Energy Information Administration
“The Hidden Cost of Oil: An Update,” National Defense Council Federation, Issue Alert, January 8, 2007
John Wilen, “Surge in Oil Prices Could Crimp Growth,” Associated Press, December 28, 2007
