Caught out in Connecticut

Published November 12th, 2000 - 02:00 GMT

As much as any fund-raising improprieties or shameless faux populist rhetoric, the recent Administration decision to release a few million barrels of oil from the US strategic petroleum reserves is the strongest indicator to date of what Americans should expect from an Al Gore administration.  

 

The call by Gore for the release of oil into the marketplace and Clinton's acquiescence to it, at the very least, should disabuse voters of any last illusions that there would be a noticeable difference between the characterless, politics-first, non-leadership that has been the hallmark of the Clinton administration, and a Gore White House.  

 

In a transparent effort to exploit voter ignorance, Gore called for the release of oil from reserves that were originally created in response to the oil embargoes of the 1970s.  

 

It was intended as a bulwark against fuel shortages sufficiently severe to threaten national security. The current run up in oil prices hardly rises to that standard and the powers-that-be know it.  

 

No less an authority than Clinton's own treasury secretary, Lawrence Summers, initially rejected Gore's call for release of reserve oil as bad policy. And Federal Reserve chairman Alan Greenspan, who many consider the keeper of the current US economic boom, called such a move a 'major and substantial policy mistake'.  

 

But Clinton, while happy to accept credit for the prosperity resulting from the secretary's and the chairman's economic acumen, stayed in character by ignoring their advice on this occasion and demonstrated yet again that winning the office, for himself or his protégé, always will take precedence over good policy.  

 

The Clinton-Gore machine dares take such a reckless step because it knows that the vast majority of voters are from non-oil producing states and have no concept of what the sudden oil price rise is all about.  

 

Having had no reason to pay attention to the oil industry while gasoline was $1a gallon, they do not understand now the connection between that pump price, current low refinery inventories and the present rise in oil prices.  

 

Much of the fault for voter ignorance must be laid at the feet of journalists who repeat uncritically the rhetoric of local Democrats spreading the gospel of Gore.  

 

At a press conference held in southeastern Connecticut only hours before Clinton announced his intention to release reserves, for example, local US Representative Sam Gejdensen called the price increase the result of 'a conspiracy of big oil companies'.  

 

Local reporters surrounding the congressman did not so much as flinch at such a serious charge. When asked later how such an assertion squared with several congressional investigations that found no evidence of such a conspiracy, he said, with a perfectly straight face and all the sincerity of a missionary: 'There may not be collusion but their profits have doubled year to year and in that time when they know we are below what we need by almost 50 percent they are shipping heating oil to Latin America.  

 

So it is clear they are participating in creating a short supply. It is one thing to have foreign companies doing us in this process, it is another to have American companies do it.  

 

'I think it is a conscious effort to gouge prices by the majors,' Gejdensen continued. Though he did not explain exactly how prices can be gouged, it must be assumed he simply could not resist trying to get that buzzword into the local papers.  

 

Demagoguery is the art of using small truths to tell big lies. It is irrefutable that heating oil went to Latin America from American refineries in July.  

 

In the new world of just-in-time inventory (a strategy that has played no small part in keeping oil and gas prices as low as they are), heating oil is as a matter of course exported from the northeast in the middle of the summer when the northern states have no use for it.  

 

Likewise, the congressman knows that the fact oil companies have doubled profits over the previous year is, to an unschooled constituency, prima facie evidence that the big bad oil companies are manipulating prices.  

 

What the congressman must also know full well is that profits are up because a year earlier profits were anemic and operations budgets were cut to the bone when oil was selling at $10 a barrel.  

 

When prices doubled or trebled and outlay was minimal, profits naturally jumped significantly - in other words an outcome of market fundamentals, not conspiracy.  

 

If the congressman honestly doesn't understand that he should be thrown from office as an incompetent. If he does understand he should be ousted for preying on voters' fears. Either way southeastern Connecticut would be better served.  

 

There is reason to believe, however, that the motive is fear-mongering. Asked, for example, if it would be advisable to lift the moratorium on offshore drilling in order to increase domestic supplies and reduce US dependence on foreign sources of oil, the congressman demurred in the name of the environment.  

 

It is the stock reply of a politician in New England, where despite evidence to the contrary just a few miles north in Nova Scotia, it is considered holy writ that offshore drilling for oil and gas guarantees oil-soaked beaches.  

 

The locals' fear is understandable if misplaced. Though the oil industry has proven in the course of the last two decades its ability to drill and produce without harming the environment, as late as the 1970s, the mills that dotted the New England countryside for a century and accounted for the bulk of the non-agricultural employment there routinely used the surrounding lakes and river as convenient dumpsites.  

 

It is, therefore, to the Democrats' advantage during a presidential election campaign against two men associated in the public eye with the oil business to continue to paint that industry as a holdover from those bad old days.  

 

If it can also be portrayed as a dark cabal making huge profits at voters' expense it is just that much better for the Gores and Gejdensens of this election year.  

 

That American politicians are allowed to make so much political hay from oil industry bashing is as much the fault of the industry as unscrupulous politicians. Stopping it, or at least minimizing it, will require the spending of considerable amounts of money on voter education.  

 

Much could be made, for instance, of Nova Scotia gas being sold to consumers in New England while Nova Scotia and Halifax surrendered none of their considerable cultural or natural beauty to become an oil and gas producer.  

 

Almost a year ago, when oil prices began their climb from the cellar, Noble Drilling chief executive Jim Day told OE that he was afraid of prices going much beyond $24 a barrel because of the reaction it would likely draw from Washington (OE January). Obviously, though he probably takes little pleasure from the fact, recent events would certainly suggest Day knew of what he spoke. (oilonline)  

By Rick von Flatern 

© 2000 Mena Report (www.menareport.com)

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