ENERGY INDEPENDENCE ON THE HORIZON - The Power Surge: Energy, Opportunity, and the Battle for America's Future - page 76

h e long run, though, can take a long time to come around. In the
meantime, rapid run-ups in oil prices tend to blow open the U.S. trade
dei cit. Spending on oil imports rises, but increased revenues from other
exports don't of set it. Even worse, the strategic role of the U.S. dollar
means dollars l owing out to pay for oil get recycled back into the U.S.
economy more problematically. Instead of coming back in exchange for
goods and services, U.S. dollars are ot en lent back to Americans. h is
helps sustain U.S. consumption, which can be a good thing for a while,
let ing Americans ride out bumps in the oil market rather than being
buf eted by them. But sustained over time, it can turn ugly. Cheap credit
can fuel bubbles that collapse in disaster, much like what happened in
real estate before the i nancial crisis of 2008. History suggests that epi-
sodes leading to the accumulation of big external dei cits rarely end well. 46
Buying more oil from within the United States rather than from abroad
can blunt this danger. Score one more for the promise of domestic oil.

m m m

All of these concerns about the economic consequences of changes in
oil markets are amplii ed by a basic fact: worries about the impact of
oil on the U.S. economy shape national security decisions. h e rela-
tionship goes back nearly a century, but the most immediate fears date
back forty years.
On October 6, 1973, a group of Arab states launched a surprise
at ack on Israel. As the Jewish state gained the upper hand, though, a
coalition of Arab countries hit back at Israel's allies, beginning a painful
embargo of their oil supplies. Several months later, Henry Kissinger,
then the secretary of state and national security advisor, would sit down
with his aides for yet another discussion of how oil had changed the
dynamics of world power. He quickly became exasperated: “Don't talk
to me about barrels of oil. h

ey might as well be bot les of Coca Cola.

I don't understand!” 47
Similar conversations have undoubtedly taken place many times
since: in 1979, when the Iranian revolution ended up sending the U.S.
economy into recession; in 1990, when Saddam Hussein invaded Kuwait
and threatened the oil i elds of Saudi Arabia; in 2011, when revolution