The price of oil, and what we can and cannot do about it, is emerging as a central issue in this year’s presidential election. President Clinton’s decision to pour 30 million barrels of oil from the Strategic Petroleum Reserve into the marketplace is the latest in a series of political decisions that seeks to manipulate market forces and drive down prices, if only in the short term, which one suspects is defined as “that interval between panicked action and a Gore victory on Nov. 7.”
It is always dangerous to play political games with basic commodities, as we learned from past wheat embargoes, but it is doubly hazardous and irresponsible when the nation’s security is at stake.
The Strategic Petroleum Reserve was created for two fundamental reasons: to fuel American armed forces if they are ever called upon to defend the nation at a time when overseas oil shipments are interrupted, and to give our nation a pool of crude oil in case of a foreign oil famine. It was not created as a quick fix to save Al Gore’s or Hillary Clinton’s electoral bacon, or even to help ease heating oil bills.
In fact, the president’s action won’t help much as we approach winter.
Crude oil must be refined to be used for gasoline or for heating oil, and America’s refineries are already operating at close to maximum capacity, thanks in part to another recent Clinton administration maneuver. When summer gasoline prices rose, Secretary of Energy Bill Richardson pressured refiners to shift capacity to gas in an effort to drive prices down. That this effort was only marginally effective testifies to the real, underlying problem facing America today excessive dependence on foreign oil, and the almost total lack of a coherent national energy policy under the Clinton-Gore administration.
I come from an oil-producing state, and to many in other regions of the country, we are seen as J.R. Ewing-style villains who get rich pumping “black gold” out of the ground and selling it to oil-poor states at inflated prices. In fact, just two years ago the domestic oil industry was in crisis as prices fell, often to levels below what it cost to produce it, because foreign producers were dumping oil on international markets in what amounted to a concerted effort to destroy our energy infrastructure. Wells were being shut down every day, and because of stringent environmental rules, when you shut down an oil well it is often shut down for good. How bad is it? In 1980, America imported about 40 percent of the oil we needed and produced some 60 percent at home. Today those figures have been reversed; a majority of our oil comes from overseas.
Despite those danger signals, as America approaches another energy crisis, the Clinton-Gore administration has blocked most Alaskan and offshore exploration efforts that would open new domestic petroleum reserves. As American production declines, we have two choices: Use less oil or buy more overseas.
Overseas often means the Middle East, a politically volatile region where oil production is controlled by a cartel that may, or may not, have our interests at heart, and which includes our old friend Saddam Hussein. If we decide to use less oil, we have to invest in massive new alternative fuels technologies something the current administration talks about. Sadly, talk won’t heat your home or propel your car.
The second Clinton-Gore response to problems involving oil is to tax it, a curious form of killing the messenger. Mr. Gore cast the deciding vote to raise federal gasoline taxes by a nickel. Depending on which statement you believe, he would love to raise gas taxes another 50-65 cents per gallon. He aggressively championed a fossil fuels tax that would do just that. Oil is also taxed at the wellhead, and according to basic economics, when you tax something a lot you get less of it. Combine that fact with declining domestic production and increasing reliance on a tenuous foreign oil pipeline that can be severed at the whim of a gathering of sheiks, and it’s no wonder that home heating oil costs are projected to skyrocket this winter.
If we were talking about wheat here, the Clinton-Gore policy would be to prohibit its cultivation in Nebraska, Kansas and most of Oklahoma; to suggest that people eat more cornbread but refuse to share the recipe; to place a heavy federal tax on every loaf of bread; to empty out military ration reserves; to buy more and more wheat from places like Russia and the Ukraine, despite political instability in those nations and then to panic and blame farmers when bread prices rose to four dollars a loaf.
That of course would be nonsense, and so is the administration’s foolish and irresponsible political use of the Strategic Petroleum Reserve. If we are headed for high energy prices and ultimate crisis, Clinton-Gore policies and Clinton-Gore inaction must share the bulk of the blame.
Frank Keating is the Governor of Oklahoma