Steven Chu is a highly accomplished physicist, Nobel Laureate for Physics (1997) and had been Director Department of Energy's Berkeley National Lab also teaching at the University of California as a Professor of Physics and Molecular and Cell Biology. Impressive credentials, but sadly miscast for the rough and tumble, oft unforgiving world of oil and energy markets and its cast of malign actors
The tableau of his Chairmanship was set early on in February 2009 when from the aerie of his Nobel perch and with oil in the low $30's/barrel and the American economy reeling, he would pontificate:
OPEC is going to do what they're going to do based on their own interests," Chu said at a press conference, adding, "I quite frankly don't focus on what OPEC should do, I focus on what we should do.
Responding to blistering criticism he would mumble a lame retraction:
Every country would want price stability, and certainly I can do what I can do to encourage OPEC countries to promote price stability.
But the die was cast to the march of oil prices to over $100/barrel by May 2011. OPEC understood, and the oil industry knew they would encounter no meaningful push-back from this administration and there would be no cop on the highway while speeding to ever higher prices.
Nary a moment along the way, a word comparable to the intercession elicited the fabled rebuke by OPEC nabobs:
In the forty year history of OPEC there has never been the case of the secretary of energy calling OPEC in the middle of an OPEC meeting ... we are very upset and disappointed at external pressure, we don't like it.
This as though fixing quotas to manipulate prices has become a divine right. Words that then Energy Secretary Bill Richardson can remember with pride for having made those calls.
Instead, the focus according to statements released by the Energy Department, Secretary Chu, "believes our primary focus should be making our country energy independent through investments in efficiency and renewable energy -- investments that will create millions of new jobs while freeing us from the grip of foreign oil." Well and good and not a meaningless priority.
But a priority only, not to the exclusion of oversight of the variables of the oil market, liaison with OPEC in order to make them aware of the impact of their actions on our economy, and giving professional guidance to the White House and the administration on the dynamics of the oil market and the formulation of policies to best protect the economic interests of the nation. Here the Department of Energy has been absent since the outset of the Obama administration, seemingly oblivious to the enormous economic pain inflicted on the nation. As an example, in March of this year putting the issue of escalating oil prices to rest (after the prior weeks 6.7% jump, Chu would instruct:
We don't want to be totally reactive so that when the price goes up everyone panics and when it foe down everyone goes back to sleep.
Only to be echoed a few days later by President Obama:
Every few years, gas prices go up; politicians pull out the same old playbook, and then nothing changes. When prices go back down we slip into a trance. And then when prices go up suddenly we're shocked. I think the American people are tired of that. I think they are tired of talk.
If the President meant being tired of the price of oil escalating from near $30/bbl on his watch to $100/bbl he is certainly correct.
Then there was the Department of Energy's silence and lack of engagement on the formation of the Energy Bill passed in June 2009. It was a 1200 page document with barely a mention of natural gas, America's newly plentiful most efficient, cleanest energy source. It seems here too the lobbying skills of the coal industry was able to silence that one government institution now formally dedicated to finding exactly those energy sources epitomized by natural gas as a transitional fuel to a curtailed fossil energy future.
And of course there is the Department of Energy's oversight for the Strategic Petroleum Reserve. Only a couple of months ago there was a release of 30 million barrels authorized to help abate the impact of ever higher oil prices due in large measure to OPEC's willful constraint on production. But it was not so much our Department of Energy that saw the light, but the International Energy Agency that was instrumental in releasing some 60 million barrels from its stockpile reserve. And yet, over the last three years as prices have advanced dramatically there seems no comprehension on the part of the Dept. of Energy nor that of the administration of the forceful tool the SPR could be in abating the destructive speculation to which the oil market has been subjected.
Most tellingly is the half-billion dollar write-down at taxpayers expense of guarantees the department of Energy extended to Solyndra, a maker of solar panels. This was exactly the type of investment and policy that Chu with his Nobel credentials was meant to monitor with a degree of professionalism. According to an extensive front page article in the New York Times: "Energy Secretary Chu had been personally reviewing loan applications". Yet, from the outset the Solyndra application was fraught with tenuous projections, in an environment of downward cascading silicon pricing, a key competitive component the Solyndra technology was meant to replace and on which its viability was based.
If not Chu, who according to the NY Times article was personally engaged, than who at the Dept. of Energy. Clearly Chu has not staffed the Department with enough professionalism to make cogent and rational decisions on these issues if a venture as faulty from the outset as Solyndra was able to get the Dept. of Energy's approval and monster big bucks with or without the millions of dollars of Solyndra's lobbying expenditures and the political access of its principals. This is the team at the Dept. of Energy that is now at the cusp of dispensing another $8 billion of Department of Energy guarantees (read 'funded by taxpayers') to other solar initiatives and start-ups.
One of the grave imbroglios of this administration are the qualifications of too many of its important appointments. No spirit of Harry S. Truman here, who was cautioned by one of his underlings upon appointing Gen. George C. Marshall Secretary of State: "Mr. President, unfortunately General Marshall thinks he's brighter than you and he, not you, should be President." To which Truman sternly responded, "Well you know young man, he's damned right!
By the way, has anyone heard anything about or from the "Oil and Gas Pricing Fraud Panel" formed with great fanfare by the Administration in April??
Follow Raymond J. Learsy on Twitter: www.twitter.com/raymondLearsy