A lead article in yesterday's New York Times, "Three Oil-Rich Countries Face a Reckoning," focused on the problems being encountered by Russia, Venezuela and Iran because of dropping oil prices. Not touched upon was the fact that world's largest consumer's -- the United States -- days as the oil industry's doormat were coming to an end and what that might do to oil prices in the years ahead.
Never before in the nation's history has an administration been so beneficent to a given industry as the Bush administration's love affair with the oil industry. While Americans continue to see their dying and wounded in Iraq, their savings and retirements eviscerated, their houses being foreclosed while their nation is becoming scorned throughout the world, one industry has benefited as never before. That is of course the oil industry and its hangers on. And so too the petro-dictatorships the likes of Russia, Venezuela and Iran.
Against the interests of the nation this administration has permitted, even encouraged the dramatic transfer of wealth to oil interests in dimensions beyond the fondest dreams of Croesus. When Bush became President the price of oil was in the range of $20 a barrel at a daily cost to Americans of $420 millions a day ($20 x 21 million barrels daily consumption). At its apogee of $147/bbl the tab reached some $3 billion a day ($147 x 21m/bbl day). This was an administration that sat on its hands, nay, overtly encouraged the higher march of oil prices. What they did or didn't do can be cited as follows:
-Oil policies were formulated at the outset of the administration's investiture through VP Cheney's office, in deep consultation with the oil industry. Summaries of these meetings are still kept under lock and key invoking "executive privilege." Know that the head of Cheney's task force left government to become a lead lobbyist for the oil industry.
-Fielding a Department of Energy that became little more than a friendly embassy to oil interests here and abroad exemplified by the appointment of the good soul Sam Bodman as Secretary of Energy who had little or no experience in matters oil and in his innocence was to become an oil patch puppet ("its all about supply and demand," and to paraphrase, "we will continue filling the Strategic Petroleum Reserve irrespective of whatever").
-A CFTC that for the better part of the Bush years spent precious time seeing, hearing and speaking no evil, protecting the backsides of the speculators and asleep at the switch when it came to manipulation, until, at last, Congress forced them to become proactive earlier this year. Once they became serious the comfort level of the speculators began to wane and the price of oil began to crack.
-A Department of the Interior, filled by the administration with oil patch veterans more interested in partying, sex and games than demanding a serious accounting of oil industry royalty obligations to the enormous benefit of the oil industry and to the detriment of the public purse
-The blatant misuse of the Strategic Petroleum Reserve (STP), disconnecting purchases from economic realities, continuing to pour oil into caverns while the price of oil was marching ever upwards. Most fatefully, as the price of oil was retreating to $50/bbl in January 2007, announcing the doubling of the STP to 1.4 billion barrels in the President's State of the Union address thereby unleashing a price escalation that was to reach $147/bbl in little over a year and giving moral cover to OPEC production cuts (why, would be the inference, shouldn't they cut production if we are going to use even less of what we have)?
-Never, in a meaningful way, using our grim position as the largest consumer of oil in the world by far, as leverage to sit at a table of producers and consumers to work out mutually beneficial policies as would be the case in most every industry with important consumer /producer relationships. With this administration, whatever producers did to increase price was okay with only the most muted PR contrived reactions. With OPEC meeting currently to once again cut production to raise oil prices (in this country we used to call that "restraint of trade" with jail terms attached) Britain's PM Gordon Brown has weighed in heavily calling on OPEC to desist, while President Bush's silence on the issue speaks volumes.
-The administration's posture is especially well defined by its obdurate and senseless threat to veto any and all NOPEC legislation. NOPEC legislation was voted by Congress vacating the "sovereign immunity" extended to OPEC countries and their oil companies which would allow the Justice Department and possibly impacted industries and individuals to sue OPEC and their interests. Thus, much as they would have the right to sue any other industrial or commercial group acting as a cartel. Here, perhaps most clearly, the administration has shown its hand at being more interested in the wellbeing of oil interests than those of the electorate it was meant to serve.
-An administration spending some $100 million a day stationing a naval taskforce in the Persian Gulf purportedly protecting the Strait of Hormuz so that Saudi Arabia and others can safely ship their high-priced oil while in effect protecting Saudi Arabia and her coast line without ever asking for a serious quid pro quo, like "how about not cutting oil production, the world economy is bleeding enough."
-And then of course the wasted eight years with virtually nothing done to get us off the oil habit. First the arrogance of opting out of the Kyoto Accord which would have begun to focus our attention on the existential dangers of global warming and climate change. Then the lackluster sponsorship of alternative fuel programs (our out of sync Secretary of Energy Bodman proudly proclaimed that over $20 billion have been spent on alternative energy programs and research during the years of this administration -- Ladies and Gentlemen, that is less than the $29 billion our government committed over one weekend to bailing out Bear Stearns alone).
-While helping to impoverish our nation, this administration's policies have helped such as Saudi Arabia to reap riches beyond their wildest dreams, while standing idly by rendering only lip service tut-tuts as billions are channeled to religious schools, community centers and the support of clerics preaching hatred of Americans and much of Western civilization with its impact on our military budget and national security
-All the while Papa Bush, an old oil industry hand who traveled to Saudi Arabia back in 1986 as Vice President to convince the Saudis to revitalize OPEC in order to prop up oil prices, cheering from the sidelines raking in millions from his association with the Carlyle group, an investment company heavily funded by Saudi interests.
Let us hope that with a new administration our days as an oil industry doormat are at an end.