No War for Oil

I am currently reading, No War for Oil, by Ivan Eland of the Independent Institute. It is a masterful book, powerfully written, steeped in solid economic analysis and understanding, fantastically well researched, and provides a tour de force history lesson on the role of oil in governments worldwide, with a particular emphasis on the U.S. and the Middle East.

Of the many fascinating discoveries this work has opened my eyes to, the destruction of the myth that oil is a "strategic commodity" and that the price of oil is determined by oil cartels was the most illuminating. Additionally, Eland rebukes the myth that if certain oil-rich regions fall into the control of unfriendly regimes, this would hurt U.S. interests by driving the price of oil up.

With a profoundly Austrian economic analysis, Eland shows what a ridiculously absurd claim this is. Markets clear. A Middle East country that relies almost entirely on the production of oil for economic growth is, if anything, more damaged by their refusal to sell it than those whom they are threatening to withhold it from would be.

In addition to the economic theory analysis, Eland analyzes all the historical examples of past oil "crises" and attempts at limiting supply and/or raising the price of oil by the various oil cartels that have existed, including OPEC. In all of these instances, the ability for any oil cartel to significantly affect the supply or price of oil was miniscule, as the more effective they were at doing so, the greater the incentive for members of the cartel to cheat and sell more oil at the temporarily artificially inflated price. Thus, as the threat of a reduction in the amount of the world's oil is announced, covertly nations and firms begin increasing their drilling efforts!

Rubber is much more important and widely used than oil in war. Yet, there is no talk of rubber as a "strategic" commodity. If Eland's analysis is correct (and I believe that it is) it would appear that economic ignorance among politicians and policymakers has resulted in one of the most disastrously misguided and destructive policies ever conceived. As this policy has been going on for over 50 years, with no end in sight, the lessons contained in this brilliant work have never been of more importance.

No War For Oil is mandatory reading for the libertarian, as well as anyone who wishes to gain a greater understanding of the politicized nature of oil. Even as a well read student of Austrian Economics, I must confess I put a bit too much stock in a few of the myths used to justify oil classification as a "strategic" commodity. Do yourself (and the world) a favor and read this book today!

Update: No War For Oil was just awarded the Gold Medal from the Independent Publisher’s Book Awards (IPPY) for excellence in Current Events (Foreign Affairs/Military)!