Financial Security

Recently we have seen how volatile oil prices can effect the economy. Last Fall, when supplies tightened, prices went up contributing to the largest trade deficit in the nations history. Today prices remain high making financial markets nervous with the threat of inflation and higher interest rates.

These disruptions, of course, are nothing compared to the oil shocks of the 70’s. In 1973 and 1979 Middle Eastern conflicts prompted oil-producing nations to turn off the taps. The transportation sector ground to a halt. The pictures we saw of long gas lines after Katrina were the norm all across the country.

The rest of the economy followed transportation into the breakdown lane. There was double-digit inflation coupled with high unemployment, stagflation. These were the worst economic downturns this country had seen since the Great Depression. While today a smaller portion of the overall economy is dependent on oil, a larger percentage of that oil is imported. The bottom line is that a significant disruption of oil supplies could once again have the country running on empty.

Our continued dependence on oil leaves our country vulnerable to economic blackmail. For instance, if we are going to threaten the political survival of the current regime in Iran, they are certainly in a position to threaten the economic survival of this country.