The energy crisis triggered by Iran's closure of the Strait of Hormuz has pushed governments around the world toward a familiar impulse: cut ties with volatile global markets and produce everything at home. But the pursuit of energy autarky, Jason Bordoff and Meghan L. O'Sullivan argue, is fraught with risk and far more expensive than most policymakers acknowledge.
Writing in Foreign Affairs, the authors warn that domestic extraction and manufacturing are often more expensive than acquiring resources through trade, and creating redundancies adds to the cost. Attempts to localize supply chains may create new bottlenecks if domestic capacity proves insufficient or more costly than anticipated, as detailed by Foreign Affairs.
Policies that restrict exports or shield domestic consumers from global prices may offer short-term relief, but they can also discourage investment, distort market signals and ultimately reduce supply. In the U.S., restricting oil exports might briefly lower domestic prices, but it would also undermine the country's credibility as a supplier and invite retaliation from trading partners.
The authors argue that a more effective approach is to manage interdependence rather than eliminate it. That means adding redundancy when necessary, broadening the pool of reliable suppliers and reducing the influence of any single chokepoint or country on the global market. Strategic reserves - not only for oil but also for critical minerals and other key materials - can help countries weather supply disruptions that are bound to happen in the future.
Infrastructure can be made more resilient too. Saudi Arabia's oil pipeline to the Red Sea, which bypasses the Strait of Hormuz, was expensive to construct but "has helped more than anything else to offset the supply shortage" caused by Iran's closure. Similar investments elsewhere could serve as insurance against disruption to other chokepoints.
Bordoff and O'Sullivan conclude that the most durable form of energy security lies simply in using less energy. The United States is safer from oil shocks today than it was decades ago not only because it produces more oil but also because it uses less oil per unit of economic output. Their goal, they write, should not be self-sufficiency at any cost but systems "strong enough to absorb shocks without breaking."
"Hvylya" earlier examined how three decades reversed Europe's energy security.