What we have learned in the dramatic price changes in the last few months is that, contrary to economists' belief, the world's demand for oil is elastic. It has been assumed up to now that people would not be willing to change their demand for oil significantly based on a change in price. Now we know better. People, and Americans in particular, can change their demand for oil. But if it done only on the basis of consumption, and there are no substitutes, the change comes at the price of terrible economic shocks. By investing in other types of energy, we can wean ourselves off slowly and without terrible effects.
It is not only the U.S.'s dependence on oil that Obama's policies seek to change. We consume the greatest amount of oil in the world, both through direct usage and in the products that other countries make for us. Change here leads the way to change all over the world.
The cost of energy is huge in any sort of manufacturing. If America can reduce its energy costs, it can bring jobs that have been outsourced back to the United States. The savings in energy would help to compensate for our higher labor costs.
The world's money supply has undergone a contraction in the past two years very like the one that happened in the Great Depression. The difference is that now we understand what is happening and can take action to stop it. The downturn of the Great Depression was reversed only by the tremendous government spending brought on by WWII. Obama and EU leaders would like to take a more proactive approach by investing in infrastructure and power sources.
Obama would also like to reduce our dependence of foreign oil for security and economic reasons. 50-60% of our oil is imported. Real cost is the military operations used to keep oil shipping routes open and secure supplies. For example, our invasion of Iraq was under false pretenses. It now appears that we were going in to secure a solid supply of o...