No individual or nation need ever worry about the supply of oil or Artificial Intelligence (AI). The latter holds true whether both are sourced across the street or on the other side of the world.
The only barrier to oil or AI accession is a lack of production. Put another way, wherever there’s production there will always be oil and AI in amounts commensurate with production. This is the markets at work contrary to popular opinion suggesting otherwise.
In a recent Wall Street Journal opinion piece about oil supply for the U.S. amid the bombing of Iran, it was written that “Americans will see higher prices in the short term because oil is traded globally. But we face little risk of actual supply shortages, unlike during the 1970s.” It’s certainly true about oil’s price being arrived at in global markets, but it’s decidedly untrue that Americans suffered oil supply shortages in the 1970s.
For evidence, we have Robert Bartley (1937-2003), the longtime editor of the Wall Street Journal’s editorial page. Writing about the 1970s in his classic 1992 book The Seven Fat Years, Bartley rejected the popular notion of oil “shocks” or shortages in the ‘70s. In his words, “The real shock was that the dollar was depreciating against oil, gold, against foreign currencies and against nearly everything else.”
Taking it further, Saudi oil Sheikh Yahmani long ago acknowledged that the so-called Arab oil embargo was “symbolic.” Americans consumed just as much OPEC oil during the embargo as they did before by simply sourcing Arab oil supplies from those the Arabs sold to. Again, a lack of production is the only barrier to the supply of market goods.
Still, the fact that so much oil is sourced in some of the most economically backwards parts of the world raises obvious questions about the worship of so-called energy independence. How much economic growth are we losing stateside as we strive for top billing as the world’s biggest oil producer? And if the answer is lower oil prices, think again. Oil was much cheaper when the U.S. was “energy dependent” in the 1980s and 1990s. See Bartley’s discussion of the dollar to understand why.
Which brings us to AI. The great Nvidia CEO Jensen Huang helpfully describes it as “work.” Yes! That’s precisely what it is. It’s machines doing and thinking for us, which is why its promise is so great.
That’s because what does and thinks for humans raises the value of human effort like nothing else. Think the division of labor and how it’s long resulted in much greater global wealth, much more plenty consequently, and much happier workers rendered happy by the very labor division that elevates their individual genius.
Which leads to a conundrum that shouldn’t be. Recently at a dinner largely populated with technology types, an American AI entrepreneur observed that Chinese AIs like DeepSeek that have been brought to life by Nvidia chips, are “blowing away” their U.S. counterparts. Are you scared? You shouldn’t be.
To see why not, it’s crucial to think about AIs in the way we should think about oil. The greatness of them can be found not in where they come from, but in what their existence means for us humans, and our soaring productivity as an effect of their existence.
It’s a long way of saying what we all know: while oil and AI are elemental to progress, it’s the production that’s an effect of both that does and will have the biggest impact economically. So, let’s not worry about the country origin of either, while thrilling at the life-transforming existence of both.
