No Tool Of Big Oil
By J. Robinson West
Friday, December 14, 2001; Page A45
It is the accepted wisdom in Washington that when it comes to
energy policy, the oil and gas industry calls the shots with
the Bush administration. This is a useful myth and an
invaluable fundraising tool for critics of the administration,
but the facts do not bear it out.
To be sure, some key administration figures were involved in
the oil business, although no top appointees in the energy or
interior departments or EPA have oil industry experience. And
it's fair to say the petroleum industry enjoys good access to
high officials, who are not unsympathetic to some industry
positions. But it's wrong to say oil is paramount and can roll
over any other interest group. The record shows the opposite.
The House has passed and the Senate is weighing opening the
Arctic National Wildlife Refuge to exploration.
Environmentalists argue that the administration's support for
opening the refuge is an example of subservience to big oil.
But in fact, it is the politically powerful Alaskan
congressional delegation, not the petroleum industry, that is
leading the charge on the refuge. Furthermore, every Republican
administration has supported opening the refuge, so this policy
is entirely consistent with those of the past 20 years, as well
as with the urgent goal of increasing and diversifying oil
supplies.
Since the inauguration in January, three issues of greater
importance to the industry than Alaska have come before the
administration, and in each case the oil and gas industry lost
to more powerful interests. The first was Lease Sale 181 in the
Gulf of Mexico, off the Florida coast. Although the industry
has an excellent environmental record offshore, the state of
Florida, including Gov. Jeb Bush, insisted no exploration be
allowed within 100 miles of the coast, as opposed to the usual
three miles. Although the prospects for needed natural gas were
high, the wishes of a politically powerful state, rather than
the oil and gas industry, prevailed.
Second was the issue of ethanol, a corn-derived additive
blended into gasoline, principally in the Midwest, to meet
Clean Air Act requirements. Elsewhere, refiners have mostly
used the additive MTBE. Oil refiners, environmentalists,
California and other states now know that neither MTBE nor
ethanol produces much in the way of clean-air benefits. But
farm states and politically active agribusiness strongly back
it, because it boosts demand for corn. California banned MTBE
and asked the Bush administration for a waiver to avoid using
ethanol. Agricultural interests easily prevailed over
California, the petroleum industry and others, however, and the
administration handed ethanol producers a huge new subsidized
market.
The third key industry agenda item was sanctions. Under the
Iran-Libya Sanctions Act of 1996 and related executive orders,
U.S. companies are denied access to Iran and Libya and are also
affected in the Caspian region. The act was also designed to
forbid foreign companies from entering these rogue countries.
It has been supported strongly by politically astute and
powerful groups opposing any Iranian threats to Israeli or U.S.
interests. But the sanctions act, no matter how well intended,
has been ignored by foreign companies, while the U.S. oil firms
have been sidelined. Last summer the act was up for renewal for
another five years. Although the administration commiserated
with the oil companies, which pay a high price for the act's
dubious benefits, it had no political choice but to support
renewal.
Beyond specific examples, there is a more fundamental fact
illustrating that the administration and the oil and gas
industry are not engaged in a diabolical conspiracy to rip off
the consumer. The oil and gas industry make money when prices
are high -- yet the prices of both oil and natural gas were
lower before Sept. 11 than when the administration took office
in January. A sliding economy has pushed them down further. In
addition, virtually every proposal made by the Bush
administration has been designed to increase supply, bring down
costs and benefit the economy.
The real collision is between consumers, who want ample
supplies and low prices, and environmentalists, who want to
limit both production and consumption. It is the international
oil and gas companies that are aggressively diversifying our
oil sources away from the Persian Gulf. Saudi Arabia, Kuwait,
Iraq and most of Iran are closed to the industry. The Caspian
region, West Africa and deepwater production were opened up at
massive expense and risk by the international companies, thus
broadening supplies away from the Persian Gulf.
Some have criticized President Bush for saying it's advisable
for oil prices to remain in a price range of $20 to $25 per
barrel. These critics argue that the president was justifying
the continued economic heist by big oil and OPEC. But the
president was correct, because prices that are too low lead to
less investment by the industry, resulting in shortages and big
price spikes when demand picks up. Stable, moderate prices are
clearly in the U.S. economic interest, not boom and bust.
Furthermore, very low oil prices will tend to destabilize the
Middle East even further.
The oil and gas industry does not own this administration. It
is an industry some dislike, but it also provides a critical
service, providing low-cost, reliable energy, and it has
legitimate interests. So far, however, it would appear these
interests have been subordinated to other, stronger political
forces, whatever the mythmakers may spin.
The writer, a former assistant secretary of the interior, is
chairman of the Petroleum Finance Co., which advises companies
and governments on energy strategy.
© 2001 The Washington Post Company
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