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Here we are, in early 2006 and the headlines are briefly given over to the disclosure that the oil companies have been underpaying their royalties from drilling on US public lands by $7 billion. One of the firms, Kerr McGee, is saying defiantly it doesn’t owe the U.S. Treasury a penny and is suing in US court to have that view confirmed.
There was a time, a generation ago, when people here in the United States thought and wrote about the underpinning of the US economy — the energy industry — in a serious way. In the mid-70s the country was bustling with groups pushing for public control, for extending the regulatory powers of the Federal Trade Commission over natural gas prices, for break-up of the oil companies. In the late 1970s I remember a bill put up by Senator Jim Abourezk of South Dakota calling for divestiture of the oil companies failed by only three votes on its first reading. Abourezk remembers Texaco immediately pumped millions into a pro-oil pr campaign.
In the 1976 Democratic primaries every candidate, from the left-populist Fred Harris to the center-right Jimmy Carter felt obliged to sign on to a statement thrust under their noses by a group called Energy Action committing themselves to aggressive moves to extend public control over the private energy sector.
In came Carter and up went the solar collectors on the White House roof. Aside from that it was downhill all the way. The oil companies spend millions to winch themselves out of the pr debacle of the oil embargo of 73-74, in which the public rightly perceived them as eager co-conspirators with OPEC in price gouging and profiteering.
By the time Carter surrendered the White House and its solar panels to Reagan (who swiftly tore them down and sent them up to Unity college in Maine) the first decisive counterattacks had taken place. The FTC’s wings were clipped, with the oil industry positioning itself for the next great bonanza, in the Gulf of Mexico, the outer continental shelf of the California coast and Prudhoe Bay, which had just come on line. The trans-Alaska pipeline had been built and Alaska primed for the taking. In the interior American west the oil shale deposits of the Rocky Mountain Front were awaiting the green light and the necessary public subsidies.
For the oil men the overarching political task was to get the U.S. Congress to surrender all effective public control and oversight and concentrate on the simple business of handing out these same subsidies. Remember, all these resources are in the public domain. On private lands the oil men had the depletion allowance, one of the great wonders of the world. On public lands the equivalent act of congressional generosity would be to relieve the oil companies of the burden of actually paying any royalties on the publicly-owned oil they were taking out of the ground and flogging to the public at a substantial mark-up.
The Reagan years were spent in clearing away inconvenient regulatory underbrush. While liberals cheered the downfall of James Watt and while the Sierra Club raised royalty-free millions by putting his sour visage on their mailers, the oil industry patiently pushed ahead, priming its champions in Congress for the struggles ahead. The strike force was to be a Louisiana/Alaska axis, with the Democratic senator for Louisiana, Bennett Johnson, speaking for interests poised to expand offshore drilling in the Gulf of Mexixo and to build the necessary mainland refineries and pipelines and the Alaska senators, Ted Stevens and Frank Murkowski, pressing for royalty-free drilling everywhere in Alaska, from the North Slope, to the Kenai peninsular to the Navy Reserve to ANWAR.
In came the Clinton crowd, briefly flapping its banner of economic populism. By the summer of 1993 the banner was furled, populism in pell-mell retreat and the sustainability of the corporate bottom-line dead center in Clinton’s agenda.
In the summer of 1996 the president played host to a coven of oil company executives during his pre-convention vacation in Jackson Hole, Wyoming. It was a victory party. The executives were incandescent in the flush of a victory they had scheming for the previous decade. Bennett Johnson and the Alaskans had scored one of the most significant victories for the oil industry in the twentieth century. The fruits of their triumph was called the Federal Oil and Gas Simplification and Fairness Act. Beyond this demure title were a series of provisions waiving all royalties due the US Treasury from the oil companies.
Finally approved by Congress on the last day of the 1996 session, the law did four things: it placed a seven-year limitation on the auditing of oil company books recording income from drilling on public lands; it turned over many of the auditing responsibilities concerning drilling on federal lands to the states; it permitted the oil companies to sue the federal government to collect interest on "overpayments", and it allowed those very same companies to set the "market price" of the crude oil upon which the royalty payments to the federal government are based.
In reality, the bill legalized a scam the big oil companies had been running for decades, underpaying royalties on crude oil extracted from federal lands, including the Alaskan fields.
Typically, Clinton cast the measure as simply a way of cutting government red tape and streamlining needless bureaucracy. "Many Americans don’t know it, but a significant percentage of the oil and gas reserves in the United States are on federal lands," Clinton proclaimed. "Until today, regulatory red tape and conflicting court rulings had discouraged many companies from taking full advantage of these resources." This bill, Clinton remarked, was part of an overall strategy that "included lifting the 23-year old ban on Alaskan oil exports and efforts to increase production in the Gulf of Mexico." All this was to be done, needless to say, while protecting the environment.
Amid the cheers, the oil company executives laid out to the obedient president the next stages of their agenda. They wanted to open up the national reserve in Alaska, to expand drilling in the Gulf of Mexico and to overturn the 30-year ban on the export of Alaska crude oil, a provision deemed necessary in the early 1970s to win passage of the original pipeline bill.
The quid pro quo was a tidal wave of political contributions , Arco’s in the lead, into the Domocratic Party treasury. The chairman of Arco, Lodwrick Cook, celebrated his birthday in the White House Rose Garden , with Clinton carrying in the cake.
Twenty years after their nadir in the early 70s, the oil companies had won it all.
By the mid-90s the oil industry no longer had any effective foes arguing for public control. Senators like Abourezk and Howard Metzenbaum of Ohio had gone. The public interest groups were successfully unplugged during Clinton time and the credibility of proposals for public control of the nation’s energy resources undermined by years of neo-liberal derision coming from groups like the NRDC and the Environmental Defense Fund which saw higher prices as the key to conservation, and which thus helped launch Enron on the world.
(NRDC went to bat for Enron during its takeover of Oregon’s Portland General Electric in the mid to late 90s. NRDC’s Ralph Cavanagh testified to Oregon’s Public Utilities Commission, saying he was in favor of the Enron take-over, that he had worked with Enron for ten years and trusted the company. Cavanagh also went to bat for Enron in California. His testimony was decisive in undercutting the protests against Enron by local citizen groups. For its part, EDF was the first major environmental group to endorse "market approaches" and deregulation.)
Today Exxon can schedule a net profit of nearly $100 billion in 2006 and it’s a three-day butt of the nightly talk shows. Meanwhile there are a few news snippets about a 3,600-mile pipeline scheduled to run from Prudhoe Bay, across Canada and down into the Midwest. Deployment of this pipe, 52 inches in diameter, will rival the Three Gorges dam in China as the largest construction project on the planet. There’s not a political ripple to be seen. The green groups are silent, even though the project is three and a half times the length of the original Alaska pipeline whose scheduled construction in rhe early 70s prompted a savage political battle.
And yes, there are also stories about the Democrats being short of ideas. The ideas got flushed down the drain in Carter time. These battles were lost long, long ago.
No, We Don’t Agree with PCR About Everything
A few weeks ago, launching into a jeremiad about the vulgar stupidity of the neocons, Paul Craig Roberts waxed nostalgic about conservative journalism a generation ago:
"What happened", Craig asked, "to a formerly conservative press to reduce it to political partisanship and warmongering? Specifically, I have in mind National Review and the Wall Street Journal editorial page.
"When I was associated with National Review, the magazine understood that the US Constitution and civil liberty had to be protected from government. When I was on the Wall Street Journal’s editorial page, the editorials were analytical and reformist."
It’s true that Roberts quit the WSJ’s editorial pages in 1980, but I have the impression he thinks that even in the 1980s these pages were a sanctuary of reason and political composure, under the overall guidance of the late Robert Bartley.
Roberts’ and my memories of the 80s diverge. At the start of the 1980s, when I was writing columns for the Village Voice, Bartley and the current supremo of the WSJ, Peter Kann, invited me to lunch and offered me a monthly later tri-weekly slot on the top right corner of the Thursday op ed page, a space allowing about 1,150 words or so, thus 400 words longer (significant in this business) than a regular opinion column. I was to be at the left end of a spectrum of liberal opinion displayed on those Thursday pages stretching through Hodding Carter, who’d made his name as U.S. State Department spokesman during the Iranian hostage crisis in the late Carter years, to - I think - Morton Kondracke as rep of the New Republic Neocons, marching to the orders of Martin Peretz. It may have been Fred Barnes, not Kondracke. Then, as now, the two were pretty much indistinguishable.
Already in the late 1970s, mistily remembered by Craig as a time when sanity prevailed on the editorial floor of the WSJ, I had rich sport in the Village Voice, week after week, with the ripe insanities being purveyed by Bartley and his henchman, George Melloan. Theirs was the boiler-room for the fantasies that powered the Committee on the Present Danger’s lobbying for the soaring military budgets of the late Carter years and Reagan time. Scarcely a week went by without another dispatch from the WSJ editorial or op page on "yellow rain". Nestling amid this luxuriant undergrowth of paranoia and artful disinformation were essays by Albert Wohlstetter about the extra trillions needed to combat the threat posed by the Soviets and their "proxies", in Central America and elsewhere. Irving Kristol was a regular contributor. (Melloan is still at it, still spewing lunacies after all these years. As Fred Gardner notes in his column here this weekend, Mad George just turned in a scorcher, trying to rehab the Osama-Saddam connection.)
One of Paul Craig Roberts’ erstwhile colleagues on the WSJ’s edit pages, the late Jude Wanniski, frequently stigmatized Bartley’s immensely influential role in marshaling the Neocons. Like Roberts, Wanniski remained an impassioned supply-sider and again like Roberts a tireless defender of Reagan’s economic policies, but he was certainly under no illusions about what the role of Bartley’s pages had been in stoking the New Cold War and the Neo-Cons’ later crusades. Like Roberts, Wanniski became a fierce assailant of the war on Iraq and of the Neocon lobby.
A few weeks ago, here on CounterPunch, we ran Bob Pollin’s critique of the actual supply-sider record, prefaced with acknowledgement of Craig’s many powerful columns on our site which have won him many thousands of eager readers on the left, as well as across the spectrum. Around the same time Craig offered a positive accounting for the "supply-side revolution".
Your CounterPunch editors certainly agree with Bob’s account of the Eighties. We see a lacunae in Roberts’ intellectual and political constructs between what actually happened in the seventies and eighties and the political and economic landscape he deplores so eloquently on our site today. So how does his interpretation of the past explain the present? Sometimes it seems to come down to this: the Reagan "revolution" has been "betrayed" by a neo-con plot! Thus does Roberts try to honor RR, while writing admirably fierce stigmatizations of the present desolate landscape, for which his political hero and his former editor are in considerable measure responsible.
Roberts’ great achievement on the CounterPunch site has been to rouse a huge audience stirred and persuaded by his savage denunciations of the war, of the jobless economy here, and of the crimes of the prosecutorial state and its onslaught on the Bill of Rights. So the caesura doesn’t bother me too much in present circumstances. It’s a long-running battle. I remember bashing supply-sider claims in columns twenty years aqo, hatched with Bob Pollin or with the late Lynn Turgeon, an ardent Keynesian. So we can sink our cesuras for the time being and find common ground, at least until it comes time to offer the coherent economic alternative program to neoliberalism. Then we’ll see how the lacunaes play out.
Cranky Old Karl Still Flourishes Despite Predictions of Demise
Eric Hobsbawm and the French economist and sometime banker, Jacques Attali, jointly celebrated Marx in a recent colloquy, reprinted in the British New Statesman. Attali has just done a biography of Marx, selling briskly in France.
Hobsbawm: I recall my own amazement when I was approached at that time [the 150th anniversary of the publication of the Communist Manifesto] by the editor of the in-flight magazine of United Airlines–on which, I may take it, most passengers are people traveling on business. He thought that the readers would be interested in a debate on Marx, because after all it did seem relevant to the present situation. A year or two later, when I found myself having lunch with George Soros, I was equally amazed when he said: "What do you think of Marx?" Well, now, knowing that our opinions on various things didn’t agree, I gave a sort of ambiguous answer, saying: "Some people think he’s good, some people think he’s bad," to which Soros said: "Do you know, I’ve just been reading that man and there is an awful lot in what he says."
Now why would the eminent Hobsbawm feel he had to temporize about Marx with Soros, the international currency trader?
Attali: "Marx predicted that capitalism will grow, that inequalities will grow with it, that the working class will be destroyed and that the workers will be poor. This is not true in the developed world, but if you look at things globally, it is true. Concentration of wealth is growing worldwide.
"The share of wealth which is owned by a small number is growing, and the number of rich people is narrowing. There are three billion people who live on less than $2 a day and out of nine billion human beings 40 years from now, 4.5 billion will be below the poverty line. This is Marx’s nightmare. And you cannot say that they are not workers. Even if they are unemployed, they are workers. And people who work with only their head, or digital workers–they are still workers. The contradictions at the heart of the market economy, to use the modern term, are more true than they ever were when applied to capitalism, which had 19th-century connotations.
"If you look at the history of mankind in the past two centuries, this is the fourth attempt at globalisation. The first came at the end of the 18th century, collapsing with the Napoleonic wars. The second came at the end of the 19th century and collapsed with the First World War. The globalisation of the 1920s collapsed with the Second World War. We are in the fourth attempt at globalisation in two centuries and the most probable outcome is that this attempt will go the same way as the previous, leading to isolationism and protectionism."
So we’d better press ahead with that alternative radical economic program.
Note: a shorter version of the first item ran in the print edition of The Nation that went to press last Wednesday.