On Thursday Fred Smith, CEO of FedEx, a company that consumes “over 1.5 billion gallons” of gasoline per year, told a gathering at the libertarian oriented Cato Institute that “oil has become a geopolitical weapon of choice, both for U.S. interests and against U.S. interests.”
Smith told the audience at the event hosted by Cato and co-sponsored by the nonprofit group Securing America’s Future Energy that the United States needed to adopt a three fold strategy: increase domestic energy production, become more energy-efficient, and develop additional types of energy beyond oil.
The OPEC cartel of oil producing countries, Smith said, exercises monopolistic control on the price and supply of crude oil. In addition to the market price paid for oil by consumers in the United States, the cost of taxpayer funded protection of Middle East oil resources must also being included in the overall assessment of the economic consequences of our reliance on foreign oil.
“[W]hat I would like to do,” Smith told a questioner in the audience, “is for the U.S. to end up being more economically secure and not fight foreign wars over a commodity.”
Smith heads up the Energy Security Leadership Council, a group within SAFE that includes business executives from companies who rely heavily on oil for their transportation needs and former military leaders.
SAFE released a new study, “Competition in Global Oil Markets: A Meta-Analysis and Review,” by economists Andrew Morriss and Roger Meiners at the same Cato Institute event addressed by Smith. The study found that “[t]he global oil market is significantly influenced by un-free forces such as a producers’ cartel and as a result is not a free market.”
SAFE CEO Robbie Diamond said “[t]he conclusion of this report…underscores the dangers that oil dependence poses to the United States and that a smart policy is needed to tackle the problem.” In its press release announcing the report, SAFE said that it “advocates for reducing U.S. dependence on oil through increased domestic energy production, more efficient oil use, and the advancement of alternatives to oil in the transportation sector.”
Alternatives to oil in the transportation sector include natural gas, which has had some success in fleet use, and electricity. The anticipated boom in the use of electric cars, however, has not taken place for a variety of reasons, as the New York Times has reported.
FedEx’s Smith enjoys bipartisan respect. A Republican who supported Sen. John McCain (R-AZ) in 2008 and Mitt Romney in 2012, he is widely praised by Democrats as well. President Obama considers Mr. Smith a model business executive. According to a 2010 article in Politico he described Smith as “an example of somebody who is thinking long term.” The president particularly likes Smith’s views on energy policy. “[H]’e’s the first one to say that if we don’t start getting an energy policy that’s smart, we’re going to lose.”