In the last few weeks, rhetoric about America’s oil addiction has resurfaced, years after being pushed by former President George W. Bush. It is meant to explain the inability of Americans to become energy independent or at least to significantly reduce consumption. The implication is that consumers are either foolish or brainwashed, and that the government is a slave to the oil industry’s lobby.
I submit that this claim reveals an ideological bias, as well as a degree of energy illiteracy.
Such illiteracy is not new and is often battled by economists. For example, when I was at MIT, one class was taught by an engineer who believed that oil was underpriced because it cost less than mineral water. I didn’t have the heart to tell him that this is a common misconception: the prices of the two are completely unrelated. …