Oil is the most important commodity in the world when it comes to human flourishing, and nothing else comes close. Stop and think about how intensely inconvenient and impoverished life would be without the goods and services made possible by oil, along with the remarkable advances in work productivity that never would have happened absent black gold.
Imagine, then, if oil were discovered on such a vast scale that its price plummeted to $5/barrel. Would this devastate the global economy, or the U.S. economy since parts of it are reliant on oil that fetches more than $60/barrel? Quite the opposite. Exactly because oil is such a substantial catalyst for human progress, much cheaper crude would power economic growth in the future that would render the present impoverished by comparison.
It’s something to remember as China-based DeepSeek reports that it can “train” AI devices operating with inferior (think cheaper) chips at costs a great deal lower than American versions. While U.S. models have been developed at costs ranging from $100 million to $1 billion, DeepSeek’s costs per model are in the $5.6 million range. Marc Andreessen was quoted by the Wall Street Journal as saying that “DeepSeek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen.” Which should excite everyone reading this write-up, Americans most of all.
As long as our markets remain open to the world’s plenty, what’s produced outside of the U.S. will have the same economic impact as a product or service produced within the U.S. Or more realistically, a much greater economic impact. Lest readers forget, it’s what humans do with AI advances that will really drive progress, not AI itself. Think about it.
The genius of machines that do and think for us will most have to do with the human potential that they unleash. AI that literally erases jobs altogether or substantial aspects of work will free Americans up to specialize on the job in ways previously unimaginable. Think of DeepSeek’s R1 as a low-cost way for bright Americans to much more quickly realize their vast potential.
To which some will respond that it’s essential for Americans to lead the way in all aspects of AI advance precisely because AI is poised to so profoundly power human advance. The viewpoint is backwards.
Especially because of AI’s stated promise, the cheaper it is to access and utilize, the better for all. Think oil once again. The commodity’s importance to progress is unrivaled, which is why the cheaper the oil the better. Look back to the 1980s and 1990s and the U.S. economy if you’re scratching your head.
The rest of the world largely supplied the oil consumed stateside, but not at the expense of growth. In fact, the U.S. economy soared as Americans outsourced the extraction of a crucial commodity to others, all so that they could focus on advances well beyond the ability of others around the world to achieve. In other words, cheap oil imports helped ignite a U.S. technology boom that continues to this day.
The imports didn’t harm us simply because work divided is never harmful. Quite the opposite, actually. It’s a reminder that comparative advantage is not situationally good. It’s always good. In truth, it’s always brilliant.
The rise of DeepSeek and other globally produced AI advances have the potential to author a Golden Age of American economic creativity as outsourced automation of work and thought enable heretofore unseen human advance. And in tying the economies of China and the U.S. even closer together, they’ll be a catalyst for peace too.
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