Monday, May 19, 2008


I love the Internet. After reading the Cafe Hayek blog, it only took a minute to find another great quote in regard to trade and peace.

Here is a clip from the Cato Blog,

The fourth-century writer Libanius declared in his Orations (III), "God did not bestow all products upon all parts of the earth, but distributed His gifts over different regions, to the end that men might cultivate a social relationship because one would have need of the help of another. And so, He called commerce into being, that all men might be able to have common enjoyment of the fruits of the earth, no matter where produced."

One of the many stories about the collapse of the World Trade Towers is of the Muslim who was running from the building when he tripped. It was an Orthodox Jew, dressed in dreadlocks and yarmulke, who helped him up and said, "lets go brother". They ran out of danger, were separated in the crowd and never saw each other again.

The Saudis are in the process of increasing their recoverable reserves from 750 billion barrels of oil to 900 billion barrels. They will accomplish this for a tiny fraction of what it would cost for the same amount of reserves to be proved in the USA. Until production increases force the price back to the level of margin cost, both countries should develop their least expensive alternatives. In the USA, the least expensive alternatives are not wind mills, corn oil or solar panels. It makes all the sense in the world to continue to do research on these more expensive alternatives. In the mean time, the US Government should lease the most promising locations to those who are willing to spend the millions required.

Should the new Brazilian discoveries be offered at a good price, we should buy oil from Brazil. Given that oil has a strategic value, we should continue to build our strategic reserves. It makes no sense for us to develop energy independence at all costs. We promote peace and prosperity for all when we buy energy from the low cost producer.