How The United States Got Hooked On Foreign Oil

The United States is predicted to become a net energy exporter by 2020. This will be the first time since 1953 that the country exports more fossil fuels than it imports. For almost a century prior, the United States of America was the largest oil producer in the world. So how did the United States get hooked on foreign oil.

Every American president since Richard Nixon has pledged energy independence as a way to strengthen us geopolitically, make us more secure, or boost our economy.

The story of American oil begins in 1859 in Titusville, Pennsylvania. Small amounts of oil had seeped from the ground for a long time, but no one knew how to extract it. Until, Edwin Laurentin Drake, a former conductor, was hired. After many failed attempts, he finally struck gold — black gold.

The next FEW decades, major oil finds in Texas, California and Oklahoma contributed to U.S. emergence as a major economic power. The 1901 Spindletop gusher in Texas nearly tripled U.S. oil production.

Henry Ford’s Model T invention in 1908 – the first mass-produced car – made America the most motorized country in the world. Other industrialized countries like France, Britain and Germany were ways behind.

To China, All’s Fair in Love and Trade Wars

The standard line from President Donald Trump and those who support his get-tough approach toward Beijing is that because China sells more to the U.S. than the other way around, Washington has the upper hand in its game of tariffs. “China buys MUCH less from us than we buy from them,” Trump recently tweeted, “so we are in a fantastic position.”

The intrusive Chinese state has all sorts of levers to control the economy and society, and in an environment that lacks rule of law, officials can pull them at their pleasure. They also have far more targets to aim at than the trade data suggest. Many American companies have substantial operations within China that are tremendously important to their bottom lines. General Motors and its partners, for instance, sold more than 3.6 million vehicles in China last year, almost all of them manufactured locally. Starbucks operates more coffee shops in China than in any other market aside from the United States. These businesses are vulnerable to government-inspired nefariousness, from product boycotts and state-press smear campaigns to regulatory investigations

The Chinese have employed such tactics in the past. In 2017, for instance, China’s government waged an undeclared war against South Korean business over a dispute regarding an American missile-defense system. When Seoul rebuffed Beijing’s demands that it cease deployment of the system—which the Chinese considered a threat to their security—China tried to compel the South Koreans by pressuring their companies and economic interests.

A primary target was Lotte, a Korean conglomerate with interests in candy, hotels, retail, and other businesses. Lotte committed the crime of providing land for the missile system. The Chinese government whipped up nationalist ire against the company through the state-controlled media. One op-ed in the Global Times, a newspaper run by the Communist Party, entitled “Lotte’s Development in China Should Come to an End,” thundered that “showing Lotte the door will be an effective warning to all the other foreign forces that jeopardize China’s national interests.” Protests erupted in front of supermarkets owned by the Korean group, while inspectors ordered outlets closed after supposed violations. Sales plummeted, and Lotte eventually exited from the business. That wasn’t all. Chinese shoppers also shied away from Korean-branded cars and cosmetics. Korean pop stars were denied entry visas; group tours to Seoul for big-spending Chinese travelers were canceled.

Canada is enduring such treatment right now. Angered that Canadian authorities (at the behest of Washington) arrested the chief financial officer of the Chinese telecom giant Huawei Technologies, Beijing blocked Canada’s exports of pork and canola, pinching the country’s agricultural sector. China has taken this step even though it isn’t in its own economic interest, since its domestic pork industry has been ravaged by swine flu. Similarly, in 2012, Chinese quarantine officers began impounding Philippine bananas amid a flare-up over contested claims in the South China Sea.

 

Europe’s Trade Victory in Washington

US President Donald Trump holds himself out as a brilliant negotiator, and his supporters regard his trade policy as a perfect example of his success. But in his recent trade talks with the Europeans, Trump was clearly out of his depth.

.. The two sides agreed “to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.” It seemed like a remarkable U-turn for Trump, who, until recently, was threatening the European Union with higher tariffs – and extolling the value of trade tariffs (which are essentially taxes on imported goods) more generally. He even called the EU a “foe” as recently as June.
Substantive follow-through on the joint US-EU statement would represent a major policy shift for the Trump administration. But this is no triumph for Trump; rather, he seems to have been outmaneuvered by adroit European diplomats.
.. what Trump and Juncker announced was essentially a pledge to work toward exactly the kind of trade agreement that the Obama administration was negotiating with the Europeans from 2013 through the end of 2016. Work on that earlier version, known as the Transatlantic Trade and Investment Partnership (TTIP), was suspended following Trump’s inauguration.
.. Restarting the TTIP negotiation is a big win for Juncker
.. It is also remarkable that Juncker managed to get Trump to emphasize working with the World Trade Organization to resolve issues regarding 
.. What did Trump get from the Europeans, other than a return to a trade negotiation straight out of the Obama era? Trump claimed, at the press conference and subsequently, that he won a pledge from Juncker to buy more natural gas and “a lot of soybeans.” Some media coverage even suggested that the Europeans had made concessions. But that interpretation does not fit the facts.
.. Regarding potential US exports of liquefied natural gas (LNG) to Europe, the Europeans have long been keen to increase this trade. The hold-up is US restrictions on energy exports.
.. If there is any concession promised by the joint statement, it is from the Trump administration on this issue. This was made explicit in the fact sheetthat the White House subsequently issued: “the United States will make it easier for the EU to purchase liquefied natural gas.”
At the same time, Juncker does not buy soybeans – the European Commission has no such budget, and any such imports would ultimately be a private-sector decision.
.. . The price of US soybeans has fallen significantly more than has the price of Brazilian soybeans, as Brazil is not subject to the new Chinese tariff. Given this, it makes sense that the European private sector will buy more US soybeans, regardless of what Juncker says or does.
.. there was no European concession at the White House on this issue – just a clever restatement of market realities.
.. The soybean pledge has some superficial political appeal, as growers have found themselves caught in the crossfire of Trump’s trade war with China. The cost is real, and the Trump administration recently promised up to $12 billion to help affected agribusinesses.

However, this entire potential cost is due to the Trump administration’s disruptive policies and represents a scandalous waste of taxpayer money – an amount equal to about one-third of the entire annual budget of the US National Institutes of Health.

.. Trump holds himself out as a brilliant negotiator, and his supporters regard his trade policy as a perfect example of his success. But in his recent talks with the Europeans, Trump was clearly out of his depth.

Trump Urges NATO to Double Military Spending Target to 4% of GDP

President Donald Trump pressured allies at the NATO summit Wednesday to double the military spending target to 4% of gross domestic product, while bashing Germany for its military spending and support for a major gas deal with Russia.

.. Mr. Trump began his visit by accusing Germany of being “captive to Russia” because of its support for Nord Stream 2, an offshore pipeline that would bring gas directly from Russia via the Baltic Sea.

Speaking in a meeting with NATO Secretary-General Jens Stoltenberg, Mr. Trump called Germany’s support for the project “very sad,” and said, “We’re supposed to be guarding against Russia, and Germany goes out and pays billions and billions of dollars a year to Russia.”

..  Senate Minority Leader Chuck Schumer (D, N.Y.) and House Minority Leader Nancy Pelosi (D., Calif.) said, “President Trump’s brazen insults and denigration of one of America’s most steadfast allies, Germany, is an embarrassment.”

.. He has met frequent criticism in Washington for appearing overly friendly toward Mr. Putin, including when he congratulated the Russian leader on his election victory earlier this year despite being advised by national security officials not to do so.

.. Germany is the biggest importer of natural gas from Russia in the EU, accounting for more than 20% of the purchases in 2017 by the 28-member bloc, according to the EU’s statistics agency Eurostat. Russian imports made up about 40% of Germany’s annual gas purchases for the past two years.