Is America losing its financial independence?

It was easier to ignore imported oil when it cost a mere $30 a barrel. At $140, however, you simply can’t ignore it. And not just because it costs $4 per gallon (or more) at the pump.

What expensive oil imports means is we are sending billions and billions of dollars to foreign countries, and many of these countries are not necessarily friendly to the United States. Take Venezuela. Thanks to high oil prices, President Hugo Chávez can finance his anti-American activities and keep himself in power.

This transfer of wealth also gives oil exporting countries more money to spend around the world. That means they can buy companies, assets and influence.

The McKinsey Global Institute completed an analysis of this, which was reported in a good article in the Wall Street Journal. This chart by McKinsey shows the foreign assets of several oil-exporting countries. Keep in mind this is from 2007 – before the latest run-up in oil prices.

In the WSJ article, Gerald Seib notes that Presidential candidates are trying to “raise awareness of the corrosive national-security effects of oil prices” – and that a real challenge for the next President is to find “common ground on what is now a genuine national-security problem.”

Of course we can’t just turn off the foreign oil spigot. But we shouldn’t close the domestically-produced biofuels spigot, either. In fact, the ethanol spigot is currently saving us about 330,000 barrels of petroleum per day -- its helping to diversify our fuel supply and lead the way for future biofuels.