International Socialist Review, June–July 2001

Editorial

The Oil and Gas Administration

From International Socialist Review, Issue 18, June–July 2001.
Downloaded with thanks from the ISR Archive.
Marked up by Einde O’Callaghan for the ETOL.

THE BUSH administration’s energy plan released in May is first and foremost a plan to reward election campaign contributors. It is premised on a crisis that has been manufactured by the same people who will benefit if the plan is implemented, and the losers are taxpayers and the environment.

Crafted by a White House commission with corporate participants whose identities have been kept secret, Bush’s energy plan turns environmental regulation on its head and conservation measures into a sideshow. The plan makes clear that this administration is – to alter slightly an old saying – “dancing with the one who bought it.” From top to bottom, the energy industry’s prints are all over this plan. And why wouldn’t they be? After all, the industry paid $48 million to elect this president and his team in 2000.

Vice President Dick Cheney, a former energy company head himself, chaired the National Energy Policy Development Group in four months of closed-door meetings. Two-thirds, or 48 members, of the group worked for energy industry companies. Not even threats of congressional investigation from Representatives Henry Waxman of California and John Dingell of Michigan could pry open the doors of the planning group for other input. A Freedom of Information Act request by the Natural Resources Defense Council to the Department of Energy was refused on the grounds that most of the plan’s papers were “pre-decisional in nature” and therefore protected from disclosure.

Using former president Bill Clinton’s strategy of wrapping distasteful policies in warm and fuzzy rhetoric, the plan is cloaked in environmental and conservation language. But the core of the Bush energy plan is to pry open vast swaths of the country to oil, gas, and coal exploration and extraction. From the Arctic National Wildlife Refuge in Alaska to offshore sites in Florida, no area is off-limits to energy companies.

By executive order, Bush intends to make environmental concerns subordinate to energy industry needs.

To add insult to the environmental assault running throughout this plan is the recommendation for another era of nuclear reactor construction. Presented as a serious contribution to a better environment, nuclear energy is boosted by Cheney as “a safe, clean, and very plentiful energy source.” Treasury Secretary Paul O’Neill raised this delusional argument to the level of farce. “If you set aside Three Mile Island and Chernobyl, the safety record of nuclear is really very good,” O’Neill told the Wall Street Journal.

But despite the bluster about the safety of nuclear energy, Cheney is astute enough to know that no energy companies will touch nuclear power without government incentives. “Nobody’s going to invest in nuclear power plants” without it, said Cheney. The›efore, the task force recommends renewing the Price-Anderson Act on nuclear accident liability. This act makes taxpayers the ultimate backers of nuclear energy to the tune of $9.5 billion. Evidently, “personal responsibility” and reducing government interference with the market – favorite mantras of the Bush team – don’t apply when it’s their rich friends whose necks are on the line.

Another gleeful supporter of the energy plan is James Watt, secretary of the interior under Ronald Reagan. “Everything Cheney’s saying, everything the president’s saying – they’re saying exactly what we were saying 20 years ago, precisely,” Watt told the Denver Post. “[I]t sounds like they’ve just dusted off the old work.” Watt is best known for his disdain of environmentalists. He pushed for drilling in wilderness areas, national parks, and wildlife refuges. He was forced to resign when he glibly suggested putting “a Black ... a woman, two Jews, and a cripple” on an advisory panel.

But it isn’t just oil executives and former Republican land grabbers who find the energy plan worthy. Dan Reicher, who headed the energy efficiency division of the Department of Energy in the Clinton administration, smiles on the plan, too. “Imitation is the sincerest form of flattery,” he told the New York Times, noting that Clinton had pushed a similar plan. While this may come as a surprise to some, the Democrats’ record on environmental preservation is weak at best. For starters, nothing was done by the Democrats to close loopholes in automobile emissions sta›dards while ever-larger gas-guzzling vehicles spilled out of Detroit during the Clinton years. Nor did the Clinton-Gore team do more than pay lip service to international treaties aimed at cutting industrial emissions that contribute to global warming.

Nearly every problem presented to the Bush administration since taking office has been used as an opportunity to pay back supporters and to punish opponents. The so-called energy crisis is simply another of those opportunities. Targeting electricity shortages in California and high gasoline prices across the country, the Bush team ignores the real culprits – profit-hungry energy bosses – and declares a supply crisis brought on by too many government regulations. If only the law of supply and demand were allowed to operate freely, they cry, everything would be fine. But the crisis is a manufactured one – the result of poor planning and corporate greed. The old Robert Klein joke sums up how the law of supply and demand really works. Oil executive: “We’ve got all the supply, so we can demand whatever the fuck we want.”

California’s rolling blackouts are the direct result of deregulation and the rush for profits. “Deregulation provides incentives for energy companies to inefficiently sell power to those customers willing to pay the most for electricity ... rather than the way it used to be when utilities were required by law to charge reasonable rates and serve local customers first because energy is an essential commodity,” writes Tyson Slocum, an energy policy analyst for Public Citizen’s Critical Mass Energy and Environment Program.

Deregulation in California served the largest energy companies well. Their after-tax profits were up 54 percent in 2000 to $7.75 billion. Three of the companies – Dynergy, Enron, and Reliant Energy – are based in Texas and gave more than $1.5 million to Bush’s campaign and the Republican National Committee. Two of these companies – Enron and Reliant Energy – are headed by close Bush advisers Kenneth Lay and James Baker III. Lay, a longtime Bush family friend, wrote the electricity deregulation policy while Bush was Texas governor. Baker was Bush’s point man in Florida’s post election battle to make sure that stolen votes stayed stolen to ensure that the oil team captured the White House.

While gasoline prices at the pump are at an all-time high across the country, this is not because oil is in short supply. Although politicians are quick to pin blame on the OPEC nations for the shortage, even the Wall Street Journal has said that OPEC’s attempts to curtail production have had little effect on the crude-oil market.

The real culprits for high gas prices are the 10 largest oil companies, which control 70 percent of domestic oil-refinery capacity and 88 percent of the domestic retail market. By controlling supply through reducing refinery output, they managed to increase their after-tax profits by 104 percent in 2000. Already this year, they have a 27 percent increase over their record profits in last year’s first quarter.

In fact, the Federal Trade Commission released a report in March on its investigation into high Midwest gas prices last summer that all but admitted that corporate manipulation was responsible. The report’s tortured conclusion was that, while no direct evidence of “collusion” could be found, the problem was caused by “conscious (but independent) choices by industry participants” to intentionally withhold supplies, thus producing artificially high prices. No companies were named.

Even former president Jimmy Carter wrote in the Washington Post recently that the U.S. does not confront an energy crisis comparable to those of 1973 or 1979. “World supplies are adequate and reasonably stable, price fluctuations are cyclical, reserves are plentiful,” wrote Carter. Carter went on to observe that the “exaggerated claims seemed to promote some long-frustrated ambitions of the oil industry at the expense of environmental quality.”

President Bush is using the manufactured electric supply debacle in California and the bottleneck in gasoline refining to push an energy plan tailored to the energy industry’s bottom line in much the same way that he used the threat of recession to push his $1.6 trillion tax cut. In fact, he has seized on the opportunity to make both arguments simultaneously. Without shame or irony, Bush told reporters that if Congress would hurry up and pass his tax cut, people would have more money to pay the high fuel prices. If this sounds a bit like using the Internal Revenue Service to funnel government money into the already fat coffers of the oil industry, you got the point.

Even before the plan was published, Cheney made it clear that he thought conservation was pointless. “Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound comprehensive energy policy,” Cheney told reporters. Bush’s budget followed up the point by slashing funding for conservation measures and research for new technologies such as solar and wind power, saying that these energy sources weren’t sufficient enough to be real alternatives to fossil fuels. This is simply wrong. “Fully using existing renewable energy technologies ... could increase generation by these renewable sources 75 percent by 2030,” notes Slocum. Together with conservation measures, these systems would be enough to replace nuclear power by 2030. An editorial in the Seattle Post-Intelligencer drew out the underlying motive for Bush’s ecologically irrational policy: “All that logically can be concluded from this profound folly is that the administration believes that the wrong people stand to profit if the nation moves to increased reliance on renewable energy and more efficient use of energy.”

Energy is like water. It is a collective resource that everyone needs and uses. It should be produced and distributed in everyone’s interest. Leaving its production and distribution in the hands of free-marketeers and energy executives ensures more “crises.” We need a public energy plan that serves everyone and doesn’t mortgage the future to pollution and corporate greed.