The old politics of oil has resurfaced to add a nervous flutter to Election 2000 and also to revive an enduring question of modern industrial life--what is the right price for oil? The media's New Economy cheerleaders scolded Clinton/Gore for tampering with the answer, but those pundits are under an illusion that the market, not governments and international politics, determines the price of crude oil. Their rage at Clinton for unleashing a little extra crude from the government's strategic reserve is an amusing non sequitur. For the past thirty years, the world price of oil has been "managed" by governments, albeit with haphazard results. The price was maintained by the OPEC cartel of oil-producing nations, with discreet consultations from the United States and other industrial powers. Before OPEC, the world price of oil had been managed since the thirties by the fabled Seven Sisters, global oil corporations that still have an influential voice in the conversations. Oil-price diplomacy, for obvious reasons, is mostly done in deep privacy.
Indeed, Riyadh and Washington are at this moment attempting once again to get the price right, that is, to steer crude oil back down to a mutually acceptable zone, centered on $25 a barrel. That's what Saudi Arabia, the largest producer, says it wants--a target range between $22 and $28 a barrel--and what Bill Clinton has called "a reasonable range" acceptable to Washington. Oil at $25 a barrel would be a lot cheaper than the recent peak of $38, but also a lot higher than the $10 bottom that oil hit in 1998, when prices were severely depressed by collapsing demand triggered by the Asian financial crisis the year before. Splitting the difference is a better solution than continued crisis, especially for Europe, because stability helps sustain everyone's economic growth.
So is $25 the right price? Maybe not. Because $25 is still cheap oil--too cheap to allow the producer nations to recapture their massive revenue losses and possibly too cheap to force US consumers and companies to undertake serious, self-interested industrial conversions away from petroleum. Since oil is traded worldwide in dollars, its real price declines automatically from US inflation. Thus, measured in constant dollars, $25 oil is really only about $13 in historical terms--right where it was in the mid-seventies. This level would be modestly above the average real price of the past fifteen years but still far below what OPEC initially gained after its two dramatic spikes in the seventies. Because of the interaction of currency values, Europe is taking a much more severe hit this time. The euro is down and the dollar is strong, so the real price of imported oil is much higher for European economies.
Texas oil guy George W. Bush is making the same retrograde noises Republicans always make--Drill for more oil! Open up the Alaskan wilderness! Drill offshore! Whatever! Bush's nostalgic notion that the United States can drill its way out of its petroleum problem is out of touch by about twenty-five years. The world isn't running out of oil--the undiscovered reserves are probably good for another century--but the United States is running out of its own oil. The proposition that we should pump and burn our remaining reserves first is completely backward, both as energy policy and for long-term national security. Al Gore, in his best moments, understands all this and has long championed a fundamental shift to alternative fuels, but he has lacked the courage to force the issue. The Clinton Administration provided gorgeous subsidies to the Big Three auto companies to develop electric cars and then allowed the industry to backslide by not increasing the government's fuel-efficiency requirements. Maybe the price crisis will prompt Gore to reread Earth in the Balance.
Oil politics is many-layered and so paradoxical that public opinion is not only confused but frequently led in the wrong direction. "Bad news" may actually be good news; the "villains" are sometimes actually victims. In real terms, OPEC's oil revenues peaked two decades ago--$493 billion in 1980 (in 1990 dollars)--and have declined unevenly since then. OPEC's oil income hit bottom in 1998, at $80 billion in real terms. So they regard the recent price run-up as a justifiable attempt to get well, to recover some of their losses. It's hard to muster much sympathy for oil potentates, but their national budgets have been severely squeezed--especially Saudi Arabia's, which absorbs more than its share of the production cutbacks because that country is the biggest and least aggressive player.
OPEC, on the other hand, has been a clumsy, hapless manager of world oil prices. Twice, it wrong-footed emerging economic conditions by increasing production just as global demand was about to swoon--inadvertently feeding the severe price collapses in 1986 and 1997. This time, they overshot again but on the upside --cutting oil supply just as the world's economies were gaining momentum. With the rising demand, prices were driven higher than the Saudis, at least, intended. Among the present dangers, the tight supply still threatens to stall out economic growth, especially for Europe, and it also gives temporary leverage to Iraq. If Iraq were to halt its exports, prices might soar again, just as Saudi Arabia and the United States are pulling in the opposite direction.
But here's some good news. Extreme price gyrations in oil promote fundamental change in US industrial structure. The seventies stimulated major shifts toward energy conservation and persuaded some sectors, like electrical generation, to decouple entirely from the vulnerability of unpredictable price shocks. Electric companies converted to natural gas and other fuels so that a major US user of petroleum was permanently lost as a market for OPEC exporters. Some authorities think this new mini-crisis is likely to encourage similar movements, especially in transportation. The auto industry, for instance, has toyed for years with available technologies like fuel cells, which liberate cars from oil, but they never moved seriously. Now Japanese manufacturers are making electric hybrids with far greater fuel efficiency. In other words, if high oil prices linger awhile, the permanent market for oil might shrink. Detroit could once again lose market share to Japan, but Americans and the environment would benefit enormously.
Sheik Ahmed Zaki Yamani, Saudi Arabia's former oil minister and a founding architect of OPEC, already fears this--another round of innovations that drastically reduce gasoline and oil consumption. "Technology is a real enemy for OPEC," Yamani warned in a Reuters interview. "Technology will reduce consumption and increase production from areas outside OPEC. The real victims will be countries like Saudi Arabia with huge reserves which they can do nothing with--the oil will stay in the ground forever."
OPEC, the sheik predicted, "will pay a very heavy price for not acting in 1999 to control oil prices. Now it is too late. The Stone Age came to an end not for a lack of stones, and the oil age will end, but not for a lack of oil." His forecast may be a bit premature, but it's a lot more cheerful than the oil chatter in American politics.
Every five years the psychologist Judith Wallerstein updates her ongoing
study of 131 children whose parents were going through divorce in Marin
County, California, in 1971, and every five years her warnings about the
dire effects of divorce on children make the headlines, the covers and
the talk shows. Her new book, The Unexpected Legacy of Divorce,
ups the ante: She now believes that parents should grit their teeth and
stay together, so traumatized were her interviewees even into their 20s,
contending with drugs and drink, bad boy-friends, unsatisfactory jobs,
low self-esteem and lack of trust in relationships. Before you young
cynics out there say welcome to the club, remember: This is not a
moralistic sermon dreamed up by Dr. Laura, the Pope, your relatives or
even Judith Wallerstein. This is science.
But what if it isn't? Scholars have long been critical of Wallerstein's
methods: She had no control group--kids just like the ones in her study
but whose unhappily married parents stayed together. (In her new book
she has attempted to get around this flaw by interviewing a "comparison
sample" of people from intact families who went to high school with her
subjects, but the two groups are not carefully matched.) She generalizes
too quickly: Can sixty Marin County families really stand in for all
America? Are the seventies us? Doesn't it make a difference that fathers
today are more involved with their kids both before and after divorce,
that mothers are better educated and better able to support themselves,
that divorce is no longer a badge of immorality and failure? It never
occurs to Wallerstein, either, that the very process of being
interviewed and reinterviewed about the effects of parental divorce for
a quarter-century by a warm, empathetic and kindly professional would
encourage her subjects to see their lives through that lens. "Karen" may
really believe divorce explains why she spent her early 20s living with
a layabout--blaming your parents is never a hard sell in America--but
that doesn't mean it's true.
The media tend to treat such objections rather lightly. Wallerstein's
critics "don't want to hear the bad news," wrote Walter Kirn in
Time's recent cover story. The real bad news, though, is the way
Wallerstein has come to omit from her writings crucial information she
herself presented in her first book about her research, Surviving the
Breakup, published in 1980.
How did Wallerstein find her divorcing couples, and what sort of people
were they? In her new book, she writes that they were referred by their
lawyers "on the basis of their willingness to participate." Surviving
the Breakup gives quite a different picture: "The sixty families who
participated in this study came initially for a six-week divorce
counseling service. The service was conceptualized and advertised as a
preventive program and was offered free of charge to all families in the
midst of divorce. Parents learned of the service through attorneys,
school teachers, counselors, social agencies, ministers, friends, and
newspaper articles." In other words, Wallerstein was not just offering
people a chance to advance the cause of knowledge, she was offering free
therapy--something she today vehemently denies ("Naturally I wanted to
be sure that any problem we saw did not predate the divorce. Neither
they [the kids] nor their parents were ever my patients"). Obviously,
people who sign up for therapy, not to mention volunteering their kids
for continuing contact, have problems; by choosing only therapy-seekers,
Wallerstein essentially excluded divorcing couples who were coping well.
Today, Wallerstein provides no information about the psychological
well-being of the parents before divorce, but in her 1980 book, she is
very clear about how troubled they were. Only one-third displayed
"generally adequate psychological functioning." Fifty percent of the men
and almost as many women were "moderately troubled"--"chronically
depressed, sometimes suicidal individuals...with severe neurotic
difficulties or with handicaps in relating to another person, or those
with longstanding problems in controlling their rage or sexual
impulses." Fifteen percent of the men and 20 percent of the women "had
histories of mental illness, including paranoid thinking, bizarre
behavior, manic-depressive illnesses, and generally fragile or
unsuccessful attempts to cope with the demands of life, marriage, and
family." Some underwent "hospitalization for severe mental illness,
suicide attempts, severe psychosomatic illnesses, work histories ridden
with unsatisfactory performance, or arrests for assault." It's not for
me to say whether a sample in which two-thirds of the participants range
from chronically depressed to outright insane represents the general
public--but attributing all their children's struggles to divorce is
The way Wallerstein describes her sample has changed also. In a table in
her 1980 book, she places 28 percent of the families in the two lowest
of five social-class rankings, as defined by the Hollingshead index, and
23 percent in the highest. In the new book, these figures are mentioned
in passing, but at the same time she calls all the families "middle
class"--including a famous wife-beating TV executive and his former
spouse, a wealthy travel agent who spent her life globe-trotting. All
are now "educated," as well, including the substantial percentage of
parents (24 percent of the mothers and 18 percent of the fathers at
initial contact in 1971) who hadn't been to college. Gone too are such
relevant facts from the earlier book as that one-third of the couples
had "rushed into a precipitous marriage because of an unplanned
pregnancy" and that half the wives, "because of their age and lack of
job experience, were viewed realistically as unemployable."
In short, what we have here are not generic white suburbanites who threw
away workable marriages in order to actualize their human potential in a
Marin County hot tub. We have sixty disastrous families, featuring crazy
parents, economic insecurity, trapped wives and, as Wallerstein does
discuss, lots of violence (one-quarter of the fathers beat their wives;
out of the 131 children, thirty-two had witnessed such attacks). How on
earth can she claim that divorce is what made her young people's lives
difficult? The wonder is that they are doing as well as they are.
What an odd presidential race! So long as George W. Bush keeps his mouth shut and remains in seclusion he floats up in the polls. His best strategy would be to bag the debates, take Laura on an extended vacation and come back a couple of days before the election. Meanwhile, Gore reinvents himself on an almost daily basis. Nothing has been more comical than his "populist" posturings about the Republicans being the ticket of Big Oil and himself and Lieberman being the champions of the little people.
This is the man whose education and Tennessee homestead came to him in part via the patronage of Armand Hammer, one of the great oil bandits of the twentieth century, in whose Occidental oil company the Gore family still has investments valued between $500,000 and $1 million.
At the LA convention the headquarters of the Democratic National Committee was on the 42nd floor of the Arco building, and the symbolism was apt. In 1992 Arco (recently merged with BP Amoco) loaned the Clinton/Gore inaugural committee $100,000. In that same year it gave the DNC $268,000. In the 1993-94 election cycle it gave the DNC $274,000. In the 1995-96 cycle it ponied up $496,000 and has kept up the same tempo ever since.
Was there a quid for the quo? You bet there was. Early in Clinton-time, the President overturned the longstanding ban on the export of Alaskan crude oil. Why that ban? When Congress OK'd the building of the Trans-Alaska Pipeline in the seventies, the legislation triumphed by a single vote only after solemn pledges were made that the North Slope oil would always be reserved for domestic markets, available to hold prices down. Congress had on its mind precisely such emergencies as this year's hike in prices and consequent suffering of poor people, soon to be trembling with cold for lack of cheap home-heating oil.
With the help of Commerce Secretary Ron Brown and Energy Secretary Hazel O'Leary, Arco was also, at the start of the Clinton era, in the process of building refineries in China. Hence Clinton's overturn of the export ban was an immense boon to the company, whose CEO at the time, Lodwrick Cook, was given a White House birthday party in 1994. The birthday presents to the favorite oil company of the Clinton/Gore era have continued ever since.
While the Democrats and mainstream Greens fulminate about Bush and Cheney's threat to open up the Arctic National Wildlife Refuge, nary a word has been mentioned about one of the biggest giveaways in the nation's history, the opening of the 23-million-acre National Petroleum Reserve-Alaska. Back at the start of the nineties Arco's Prudhoe Bay reserves on Alaska's North Slope were dwindling. Now Arco will be foremost among the oil companies exploiting a potential $36 billion worth of crude oil.
Gore's "populism" is comical, yet one more facet of a larger mendacity. What suppressed psychic tumult drives him to those stretchers that litter his career, the lies large and small about his life and achievements? You'd think that a man exposed to as much public derision as was Gore after claiming he and Tipper were the model for the couple in Love Story, or after saying he'd invented the Internet, would by now be more prudent in his vauntings. But no. Just as a klepto's fingers inevitably stray toward the cash register, so too does Gore persist in his fabrications.
Recently he's claimed to have been at the center of the action when the strategic oil reserve, in Texas and Louisiana, was established. In fact, the reserve's tanks were filling in 1977, when Gore was barely in Congress, a very junior member of the relevant energy committee. The legislation creating the reserve had been passed in 1975. At around the same time as this pretense, the VP claimed to have heard his mother crooning "Look for the union label" over his cradle. It rapidly emerged that this jingle was made up by an ad man in the seventies, when Al was in his late 20s.
As a clue to why Al misremembers and exaggerates, the lullaby story has its relevance as a sad little essay in wish fulfillment. Gore's mother, Pauline, was a tough character, far more interested in advancing Albert Sr.'s career than in warbling over Gore's cot. Both parents were demanding. Gore is brittle, often the mark of the overly well-behaved, perfect child. Who can forget the panicked performance when his image of moral rectitude shattered at the impact of the fundraising scandals associated with the Buddhist temple in Los Angeles?
"He was an easy child; he always wanted to please us," Pauline once said of him. The child's desire to please, to get the attention of often-absent parents, is probably what sparked Gore's penchant for tall tales about himself.
Gore's official CV is sprinkled with "epiphanies" and claims to having achieved a higher level of moral awareness. In interviews, in his book Earth in the Balance and, famously, in his acceptance speech at the 1992 Democratic convention, Gore has shamelessly milked the accident in which his 6-year-old son was badly hurt after being struck by a car. Gore described how, amid his anguish beside the boy's hospital bed, he peered into his own soul and reproached himself for being an absentee dad. He narrated his entry into family therapy. But Tipper and the children didn't see more of him as a consequence. Despite that dark night of the soul beside Al III's bed, Gore plunged even deeper into Senate business and spent his hours of leisure away from the family, writing Earth in the Balance while holed up in his parents' old penthouse in the Fairfax Hotel. Soon after, he accepted Clinton's invitation to run for Vice President.
Gore's a fibber through and through, just like Bill. A sad experience in the closing weeks of the campaign is to encounter liberals desperately trying delude themselves that there is some political decency or promise in the Democratic ticket. There isn't. Why talk about the lesser of two evils, when Gore is easily as bad as Bush and in many ways worse? The "lesser of two evils" is by definition a matter of restricted choice, like a man on a raft facing the decision of whether to drink seawater or his own urine. But in this election there are other choices, starting with Nader and the Greens. It isn't just a matter of facing seawater or piss.
To date, the Rehnquist Court's environmental record has been mixed. While no darling of the greens, neither has it been consistently "brown."
Contrary to the impression fostered by the government's supporters, not all the fuel protesters are selfish, gas-guzzling throwbacks greedy for a bigger TV.
NPR's Living On Earth program broadcast a radio version of this story over the weekend of
September 1-3, 2000. Research support provided by the Investigative Fund of
the Nation Institute.
President Bush was not deterred by lack of expertise when it came to deciding a highly specialized scientific issue.
The Bush Administration is pulling a fast one on energy, and we
will all pay dearly for decades to come. By panicking the public with oil
industry propaganda of an energy shortage, the Bushies are building
support for the most reckless energy policy since the days before the
environmentalist movement, when blackened skies and lungs represented the
vision of progress.
To make things worse, to head off objections to their plans to plunder
virgin lands and obliterate conservation measures, they have thrown in as
a palliative the old oxymoron of "clean" nuclear power.
Of course there is nothing clean about nuclear waste, which can never
be rendered safe.
The public may temporarily accept new nuclear power plants, as long as
one is not built anywhere near their neighborhood and the radioactive
byproduct is shipped to another part of the country.
But trust me, while these things may be better designed today, the
insurance companies are no dummies for still refusing to insure nuclear
power plants. It is wildly irresponsible for the Bush Administration to
now insist that US taxpayers underwrite these inherently dangerous
Does anyone even remember Three Mile Island? Or, more disastrously,
Chernobyl? I was the first foreign print journalist admitted to the
Chernobyl plant after the explosion. Even a year after the fact, and with
the benefit of the best of Western scientific advice, it was still a
scene of chaos. Nuclear power is like that--unpredictable, unstable and
ultimately as dangerous as it gets.
The entire Chernobyl operation is now buried in a concrete-covered
grave, but the huge area under the radioactive plume emitted from the
plant is a permanent cancer breeding ground, as is the sediment in the
area's main rivers and throughout much of its farm land. I traveled from
Moscow to Chernobyl by train in the company of top US and Soviet
experts, but even they seemed to feel lost and frightened as they donned
white coats and Geiger counters to tour Chernobyl. Nuclear power is just
too risky a gamble to push because of a phony energy crisis.
The desperation in the White House is palpable, but it is not over an
"energy crisis," which Bush's buddies and campaign contributors
manipulated in the Western electricity market.
No, the fear of the Bush people, even before Jim Jeffords's defection,
was that their political power would be short-lived and that they had
best move as fast as possible on their pet projects, beginning with
increasing the profits of GOP energy company contributors.
Why else the panic? There is no sudden energy crisis. Known
world reserves of fossil fuel are greater than ever, alternative energy
sources are booming, and conservation measures work. If the Federal
Energy Regulatory Commission would do its legally required duty of
capping wholesale prices to prevent gouging, there would not be an
electricity crisis in California or elsewhere.
The FERC has not done its job. Clearly, as the New York Times reported
last week, energy wholesalers are in cahoots with the Bush administration
to use the FERC as their personal marketing tool to drive up their
already obscene profits.
Finally, there is simply no reason to rape America in pursuit of
something called "energy self-sufficiency." If the vast reservoirs of
natural energy resources--resources that are sitting under land
controlled by regimes around the world that we've propped up at enormous
military cost for half a century--are not available to be sold to us at a
fair price, why continue to prop up these regimes? What did President
Bush's Dad, with his buddies Dick Cheney and Colin Powell, achieve in
preserving Saudi Arabia and Kuwait if those degenerate monarchs they
saved in the Gulf War will not now trade fairly in the one commodity of
value that they hold?
We must make our quid pro quo clear: We will pay for a huge military
to keep these sheikdoms and other energy-rich regimes in power only if
they guarantee fair oil and natural gas prices for our retail consumers.
Make that deal and the energy "crisis" is history.
Fernando Contreras points to the area behind a green mesh fence where his family home used to be. He is about to be a grandfather for the first time.
In a small brick house strung year-round with Christmas lights, behind curtains made of flowered sheets, Jeremiah Smith is listening to his favorite preacher on the radio.