This has never been how it works.
Oil is a global commodity. Even if the US produced as much as it consumes, if something happened in the middle east, the global price would go up. Because when the price went up in Europe or Asia, American oil producers would sell to the highest bidder, which would force American consumers to bid higher.
The real path to "independence" is to stop consuming oil, i.e. the electrification of transportation and heating. Which is starting but nowhere near finished.
Because electricity generated from solar/wind/nuclear/hydro is not a global commodity. Nothing that happens in Iran is going to change the cost of power generated at Hoover Dam.
https://www.investopedia.com/terms/l/law-one-price.asp https://en.wikipedia.org/wiki/Law_of_one_price https://corporatefinanceinstitute.com/resources/knowledge/ec...
This has been well established in mainstream energy economics for ~50 years. Other disciplines seem to have trouble grokking the arguments. But ask any professional trader and they'll go with the economists on this one.
For this and various other temporary phenomenon governments set limits on market economies to prevent outcomes pathologically opposed to the wellbeing of residents. These limits include export controls and subsidies on food and other basic necessities. It absolutely makes sense for a country not to suddenly shift its income to the benefit of external commodity holders due to a sudden price jump in the commodity due to supply chain issues. Not doing so could destroy “higher value” “finished product” industries by making them uncompetitive.
If a large supply chain issue hits a critical necessity you would absolutely expect countries to start triggering their hoarding policies making the issue worse. An economic zone not planning for such a disruption to occur in the future is equivalent to a bet that such disruptions will never occur.
The PPE shortage of 2020 demonstrated very clearly how quickly free-market economics gets thrown overboard in a serious crisis.
Crude is not an identical commodity in the sense that is assumed by the Law Of One Price. There are some crude specifications that certain refineries prefer not to process, either due to sulfur or viscosity or other characteristics for which the refinery may be ill equipped.
https://www.mckinseyenergyinsights.com/resources/refinery-re...
Crude transportation takes time and money. Transportation prices rise in correlation to crude prices, but they matter if you are determining the relative marketability of different products sourced around the globe.
Arbitrage works worst when transactions are lossy, costly, delayed, and unique, as is the case in the petroleum market.
If you compare the petroleum market to the markets where those things are actually major factors, like the market for artwork, petroleum is an idealized commodity market. The fact that the price of transportation isn't literally zero and there are different well-defined grades of the commodity doesn't meaningfully change that. Transaction costs are never literally zero.
And what matters is the relative transaction costs. You have to ship the oil from the well to the refinery, but if the transportation to go 1500 miles from Texas to a refinery in New Jersey and the cost to go the same distance in the other direction to a refinery in Mexico are the same, there is no relative difference in transportation costs.
It wasn't even legal to export oil until 2015! https://www.gao.gov/products/gao-21-118#:~:text=With%20U.S.%....
That would cost US oil producers billions of dollars -- more than the price increase would cost US consumers. Which would only happen if oil producers had dramatically less political influence than they do now, i.e. if we stopped producing so much oil. But then there would be no reason to do it.
> It wasn't even legal to export oil until 2015!
Crude oil. It was protectionism for US refineries, not the other thing. Which makes oil cost consumers more, because of the reduction in competition for refining.
But if WW III starts with say China taking Taiwan and getting into stuff in the pacific, and Russia invading easter european countries, and maybe some other stuff... If the US were to fully engage in some kind of global conflict, they could ban oil exports and not have a supply problem.
This is the kind of thinking the military engages in to ensure their own supply chains won't be distrupted in a war. The ability to operate independently is important even if it's never used.
https://www.pillsburylaw.com/en/news-and-insights/us-repeals...
Also, several oil-producing nations have off-market domestic pricing for refined petroleum that is favorable versus the international spot price. Such prices won't naturally change when, say, the Strait of Hormuz closes. The IMF has been trying to force free-market pricing, as was the cause of the Ecuador protests in 2019.
So it translates into a strategic issue, and, there will be direct involvement by the US if things get bad.
The US I think will stay in S. Korea until the situation changes, it's better to have chips, but that's not necessary.
Yes, I believe those countries would prefer if we stayed. Japan and S. Korea are particularly close to China and prefer we’re around to tamp down Chinese aggression. Germany is hoping we don’t withdraw our troops: https://m.dw.com/en/germany-welcomes-bid-to-halt-us-troop-wi...
Edit: This may offend some Europeans, but I think the world is better off with the US having bases in Europe and as a NATO member. Internecine squabbles in Europe don’t have a good track record over the past 100 or so years. One might even say the bases should be located where the trouble seems to start.
It's not that simple. American presence on the Korean peninsula makes reunification efforts overly complicated. By some estimates, reunification would grow the Korean economy to be the third largest in the world. It would also give Koreans access to Russian pipelines and a large border with China. When climate change opens up arctic trade routes and frozen arctic resources, Russia will be in the position to benefit the most (although Putin relies too heavily on his tsarist-Stalinist strain of conservatism to be able to exploit the economy as efficiently as liberals or perhaps Chinese communists might). As convenient as it is to have a powerful ally in the U.S., the U.S. is no longer in a position where it can dictate the behaviors of foreign nations as it once used to, especially regarding China. That's simply a reality that Koreans have had to come to terms with, despite Americans seeming to believe that things can just return to how they used to be half a century ago.
Remember that US troops were stationed in Berlin/ West Germany prior to German unification (i'll admit its not the exact same situation since the East German economy was relatively much stronger pre-unification than the current DPRK economy).
If you're suggesting that we should just let the DPRK take over ROK... well, I don't think any of the ROK inhabitants would like that.
The fact that the American military gets to decide what the Korean people want or what the reunification process will look like, is the single biggest factor hampering the peace process.
Now, with that being said is American military presence an issue for North Korea? Yea definitely. But if the U.S. withdrew troops it's not like Korea would all of a sudden be reunited. There's a laundry list of issues that would need to be resolved. American military presence is just North Korea's go-to excuse because they seek to divide the South Korean and American alliance.
If North Korea wanted to, they could just open the borders, stop starving their people, and all that jazz. Why do they need to do all of that crap? Because 25,000 Americans are in South Korea? Yea ok.
There are actually evil people in the world that don't live in America. Many of them live in North Korea, happily starving people, raping women, and executing people for no good reason.
Europe would do much better by defending itself on its own terms rather than perpetually hiding behind the Stars and Stripes. Hopefully Trump made it clear how dangerous that is.
For the same reason the US pushed Saddam out of Kuwait.
The 'world order' we grew up with seems like it's strong but it's not, it's very fragile.
US protection of S. Korea / Japan / Europe is like 'propping up key dominoes' in the chain.
Wars break out sometimes fairly easily, having bullwarks ostensibly keeps them from falling down.
Obviously there are many costs and risks.
That's because voicing such opinions, particularly to foreign strangers, is so far outside the established Overton window that South Koreans have been jailed for voicing them while working in the wrong occupation [0].
Case in point: Just look at the history of the No Gun Ri massacre during the Korea war [1], to this day neither the US nor South Korean government have really fully acknowledged or taken responsibility for what happened there, and just like with similar massacres of that kind: For the longest time survivors were persecuted for speaking out about what happened [2]. Decades of that breeds a culture of silent compliance.
There's also that whole politeness aspect: If you are a American, then no Japanese, Korean, or many Asian people in general will have small talk with you by opening a can of worms like "Your soldiers are/did occupying/bomb my country!", that would just be considered a very inappropriate thing to do.
[0] https://en.wikipedia.org/wiki/National_Security_Act_(South_K...
[1] https://en.wikipedia.org/wiki/No_Gun_Ri_massacre
[2] https://thediplomat.com/2014/08/south-koreas-own-history-pro...
The problem is that Korea is a vassal state and there is no path to expelling occupying troops without conflict, which nobody wants.
If you ask more specific and nuanced questions which don't jump to such drastic solutions, then you are quite likely to get different responses. eg. "Should the Korean government command the Korean army?" or "Should Korean voters be able to decide on the relationship between ROK and DRPK?" / "What role should occupying powers (eg. Japan, China, US) play in that?" or "What should be done about US officials guilty of atrocities (eg. Gwangju massacre) and other human rights offences (there's quite a lot of them) in South Korea?"
> German Chancellor opposes US troop withdrawal plan
https://www.aa.com.tr/en/europe/german-chancellor-opposes-us...
Without having a powerful army, Europe is just an order from being invaded by Russia.
* https://en.wikipedia.org/wiki/List_of_countries_by_military_...
Of course raw numbers don't tell the whole story:
* https://www.defensenews.com/opinion/commentary/2019/05/03/ru...
* https://warontherocks.com/2019/12/why-russian-military-expen...
Russia isn't even in the same league of spending power and the Soviet army of the past was way stronger.
While Russia spends a lot of money on their army ( % wise), they don't have the resources to renew it. What's left is a lot of old gear and some renewed one.
As a counter perspective, Ukraine would have made it's naval fleet completely unusable, as it needs to pass that country for getting anywhere.
And Europe ( in the last 30 years) came within missile range of Moscow, since the fall of the USSR.
The propaganda of Russia is mostly power related, but they are certainly not as powerful as they seem. And the cards don't look that great too.
A lot of their resources depend on oil/gas purchases from Europe and Europe is investing in alternative sources, while Russia can't raise the prices for their citizens/neighboring countries.
Eg. The pipeline Russia mostly invested in to Germany has been halted, because of Alexei Navalny: https://www.cleanenergywire.org/factsheets/gas-pipeline-nord...
And last but not least, as a belgian citizen, i appreciate US presence and have no desire for foreign troops to withdraw. We all share ( mostly) the same/similar culture and perception.
> As a counter perspective, Ukraine would have made it's naval fleet completely unusable, as it needs to pass that country for getting anywhere.
They had open access to the Black Sea even without Crimea, I'm not sure how Ukraine could block them then or now?
btw pipeline isn't halted (so far): https://www.spglobal.com/platts/en/market-insights/latest-ne...
For why Ukraine is important, i once read this: https://www.ft.com/content/1f749b24-9f8c-11e3-b6c7-00144feab...
Which was what influenced my judgement about Ukraine and Russia's fleet.
https://en.wikipedia.org/wiki/Hungarian_Revolution_of_1956
https://en.wikipedia.org/wiki/Prague_Spring
or those russian soldiers on holiday in the ukraine.
It's very strongly related to the geography of the region.
https://en.wikipedia.org/wiki/Molotov%E2%80%93Ribbentrop_Pac...
And here's the answer:
https://en.wikipedia.org/wiki/Polish%E2%80%93Czechoslovak_bo...
Check out all of the minor wars Poland was involved in between 1919 and 1938.
I wouldn't want to bet my freedom on that.
I know why they're doing it, it's just cynical for the locals.
Similar story for Korea, if you're a great power, wouldn't you move the possible battle like a few hundreds of kilometers away from your capital? You would.
It would still suck for the locals.
Chine will obviously not risk another Korean War, there's nothing for them to gain. If South Korea loses US support, yup, I'll take that bet in a heartbeat.
"Only" makes it sound weird considering it's in major parts these Okinawan's that have to pay the burden for the massive US presence [0].
While for most mainland Japanese it's as simple as "It doesn't affect me personally, it's an advantage for the whole nation, why not?"
And not to diminish it, but the rate in your article is quite small considering the populations involved. I wouldn't be surprised if the assault rates by military personnel stationed in the US was much different.
You are probably not in the majority there.
Do you want the Russians grabbing larger of E. Europe and seeing how far they can go with it?
At the end of the cold war it seemed as though maybe NATO might be past it's usefulness, but after a resurgent Russia, it seems more like it's going to take another 70-100 years probably.
Also, the 'rest of the world' is a more chaotic place, and it bodes well for Europeans to be playing well with American forces.
North Africa is a hot-spot and Europe (except UK/France in very limited form) doesn't have the ability to project power, even in the Libya intervention, it was backed by US AWACS, drones, and organization. It was kind of a folly, but there's no doubt that those interventions could be much more necessary in the future.
Politicians know this and there's no real popular urgency for the Americans to leave.
Both Norway and Sweden, the later a non-NATO country, are going more coordination with the Americans, not less.
Such will be the situation for a few decades.
If Germany ordered US troops out, they would leave. Even Iraq, barely a functioning country, did this, and the US left. But Germany, Japan and South Korea have not asked.
And you might say, "well, the US is functionally bribing them with the economic boost of stationing troops there". And... OK? That's the tradeoff. Germany is a wealthy country, and the populace can vote and make choices themselves.
Like as if it wasn't for the entire century. USA has ennormous, and largely unexplored oil reserves.
Additionally, the US won't ever need to touch these again if it manages to reduce its reliance on fossil fuels.
Not really. Energy is a dirty business, and also one filled with politics and propoganda. Fracking, much like nuclear, was targeted mostly for political, not technical reasons. It's damaging, but less so than coal and not all that much more than vanilla drilling and pipelines in general.
Solar is now the cheapest assuming we get grid scale storage(or, more likely, store excess solar as hydrogen fuel).
If chip production was just a matter of money, both China and the U.S. would rule the roost. The real bottleneck is talented and loyal engineers.
Semiconductor engineers salaries in Taiwan could've been as low as $26k-$28k USD back in 2007-2009. Multi-year long PhD "interships" can be unpaid, or completely minimally so.
A chance for an average semi process engineer graduate to survive to doing real RnD was close to 80-100 to 1.
The rest of the industry is still around $34k-$45k
That lags behind the wage growth in the rest of Taiwan.
If that’s the case that’s really surprising given how significant TSMC is to Taiwan politically.
- How much military spending is really what other Western countries would call welfare - not only do you pay the US recruits, they get pensions, they and their families get healthcare etc etc.
- The payback of being the worlds only superpower has been enormous anyway. This is probably a marginal cost.
- It's not entirely clear that building a fab is like dropping a supermarket into place. Whilst in operation they are lights out I sincerely doubt they can be easily replicated - at the very least you will need to just kidnap the whole middle management layer of TSMC and move them to Texas. Which is more or less the current negotiations:-)
In short, yeah the US (and EU) should spend a fortune to build out their own internal chip capacity. Just as we should have done it for oil or electric batteries or ... but we just don't. China however has. Something democracy is good at. Somethings it ain't.
We should fix that :-)
There are more people sitting in offices there than on the floor.
I fact there is a huge oversupply of semiconductor engineers globally because of fabs becoming less, and less labour intensive.
Companies take a big effort to reduce the number of people on the floor futher, but now not so much for labour cost readon, but security. The chance of somebody who shouldn't really be on the floor acidentally pressing the wrong button, and sending $10M worth of wafers down the drain is the risk they don't want to take.
1. Would it thus cost the same to operate such a fab in the US?
2. Why did the US outsourced the semiconductor fabrication in the first place? Was it more labour intensive in the past?
Taiwan does not have dramatically lower taxes than US, but there is something particular to how working capital is accounted which will make for a double digit difference in the in TW vs. US.
Third is supplies. Even before the semi moving to Asia, US fabs had to import a big portion of their supplies.
2. > Why did the US outsourced the semiconductor fabrication in the first place
Why did US outsource almost everything, even when it makes no sense?
It simply tough, tedious, problematic doing business in the US.
I wrote about it many times before here.
You mind your own business, very much literally. Few month down the line some trouble comes: lawsuit, taxmen, utilities, creditors, SEC, city hall, suppliers, random activists, labour union... pick any.
Building a fab requires labor, a lot of it.
Imagine, where they get their workers? They import them all from their home countries.
Similar consolidations have happened in the past and in other industrial fields. This time, two of the three surviving champions are simply not American.
Very large parts of it is protecting democracy. Whether you believe that's worth protecting is a different question, but it's left over from cold war & proxy wars against Russia in both Vietnam and Korea.
This is still once way the US exerts its presence against China. Maybe futile, but it is more than just "cheap labor".
Culturally their are similar, speak the same language. Mainland is Taiwan's biggest trading partner. & before the Japs was Chinese territory. and China has an iron will to bring Taiwan into the fold. What would the US gain again from making Taiwan it's territory - war and more debt.
Chip fabs can easily be built in the US on a 3 year timeline. Whereas that same 3 year timeline, maybe the PRC would've taken Taiwan.
The rest of the free world would likely need to take the first step of officially recognizing Taiwan as a sovereign country[1] before deciding to officially commit to protecting Taiwan.
[1] https://worldpopulationreview.com/en/country-rankings/countr...
The USA is becoming more isolationist - it is nearly oil-independent, so it's signalling pulling out of the middle east (deals with Iran etc).
But it is not silicon-independent.
So S Korea and Taiwan are totally dependent on massive US troop deployments (25,000 !! US troops by the DMZ, a whole fleet patrolling the straits by Taiwan).
Ensuring chips flow in their country is a matter of national security - so the price is probably low.