by John M. Curtis
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Copyright March 18, 2000
All Rights Reserved.

don’t think there’s any question that energy prices are going to go up in the future," said a sobering Jimmy Carter in a lively debate with eternally optimistic Ronald Reagan in 1980. With double-digit inflation and soaring energy prices, few Americans wanted to hear Carter’s doom-and-gloom scenario. Promising people lowered inflation and reduced gas prices Reagan’s appeal proved irresistible. Little did anyone know that the next decade would produce a worldwide oil glut and plummeting prices. From 1982 to 1998, the price of oil dropped from $35.00 to $12.00 per barrel, pushing gas prices in some parts of the country to below 70 cents per gallon. So much for gloomy predictions. "Sometime between now and the end of the decade," said independent presidential candidate John V. Anderson in 1980, "worldwide demand for oil will exceed available supply, causing global shortages." While Anderson’s prophecy turned out to be false, America’s dependence on cheap Middle Eastern oil continued unchecked.

       Spiraling out of control, the price of gasoline has now gone through the roof approaching the once unthinkable price of $2.00 per U.S. gallon. Of course that’s on American soil. Europeans have long been fleeced paying upwards of $5.00 per Imperial gallon [equivalent of 4 liters]. Spoiled too long by affordable gas prices, Americans aren’t used to paying through the nose for basic commodities like gasoline, bread, milk or eggs. Unlike the dairy and grain industries, America hasn’t been a world leader in petroleum production for decades. Long gone are the nostalgic days of the Beverly Hillbillies when hitting geysers in West Texas or Oaklahoma supplied plenty of crude oil for a less voracious American economy. When American wells dried up, it only made sense for oil companies to joint venture with Middle Eastern and North African countries whose oil literally oozed from the surface.

       Exporting technology, creating wells, and building refineries seemed like a good move to multinational petroleum companies willing to sacrifice American jobs for cheap Middle Eastern oil. Intoxicated by unprecedented profits, American enterprise failed to see the fledgling but now billionaire oil sheiks betraying their Wall Street benefactors by forming the cartel known as OPEC to set production levels and fix market costs. When OPEC came of age and rebelled against its American oil barons, they finally figured out who was calling the shots. Unable to admit their helpless dependency, America learned an ugly lesson: It was totally at the mercy of the world’s greatest fossil fuel monopoly. Before the rude awakening in the early '70s, few imagined that powerful Western economies were at the mercy of Middle Eastern oil. Applying the chokehold in 1973, OPEC asserted its power on the Western World. Asian economies—other than Japan—were still in their infancies, not yet adding dramatically to worldwide petroleum demand.

       When the first oil "shock" hit Western economies in the mid-'70s, spurring runaway inflation, creating widespread shortages and producing infuriating gas lines, the rug was pulled out from unsuspecting consumers. Jolted out of its denial, Americans were faced with the pain of inflated pump prices and fear of widespread shortages. "Americans are going to have to learn to do with less," said president Carter, doing his utmost to create a new conservation ethic. It’s déjà vu all over again! Twenty-years later were still talking about alternative fuels. GM’s EV1 electric car went over like a lead balloon. Ethanol, natural gas, coal, and, yes, solar energy, haven’t replaced the mighty power plant behind Henry Ford’s Model T. With energy demands skyrocketing, we’re more dependent today than ever on cheap foreign oil—though it’s hardly cheap.

       Repealing the 4.3-cent federal gasoline tax or 8 cent tax here in California, or flooding the market with the U.S. strategic petroleum reserve is only a myopic Band-Aid, postponing the eventual day of reckoning. Preventing the export of Alaskan crude punishes domestic producers and offers little long-term solution. Pressuring OPEC to increase production is a step in the right direction but doesn’t go far enough. Treating the world’s greatest economy with contempt, OPEC needs to consider the cost of punishing their number one customer. You’d certainly think Kuwait and Saudi Arabia owe the U.S. some preferential treatment after mobilizing over 500 thousand troops in Operation Desert Storm. Ejecting Iraq from Kuwait and saving their sovereignty should count for something. Though they’re only two of OPEC’s 11 members, they represent the lion’s share of American petroleum imports. Acquiescing to the current gas crisis, the Department of Energy showed its worthlessness. "It’s becoming increasingly apparent that, so far as gasoline markets are concerned, the United States is moving into uncharted territory," said the Energy Department’s information agency.

       With an attitude like that, it’s no wonder that fuel prices are out of control. Why hasn’t the Energy Department generated bilateral accords with its suppliers, specifying the parameters for doing business with the United States? Why is it OK for the U.S. to restrict the unbridled greed of domestic utility companies, but it’s not OK for the U.S. to do the same with foreign energy suppliers earning a living on American soil? When the Energy Department passively watched the U.S. economy dangerously overheat in the mid- to late-'70s due to runaway energy costs causing the worst inflation in post-war history, many politicians vowed that this would never happen again. Now were faced with exactly the same scenario. With the stakes higher today, OPEC’s threatening to torpedo the longest recovery in U.S. history.

       Releasing the latest CPI figures at .50%, the Commerce Department blamed current inflationary trends on increased energy and food costs. Guess what? They can’t be ignored. That’s how runaway inflation got started in the early and mid-'70s. Energy costs are no aberration. They’re ubiquitous and directly related to inflationary pressures in all sectors of the economy. When’s the Clinton administration going to wake-up from its current bout of amnesia? If they don’t adroitly—and forcefully—manage OPEC’s recent unsavory greed and camouflaged blackmail, the current rosy economic outlook could go by the boards. With Wall Street already going through gyrations, the handwriting is already on the walls. Greenspan gets it... doesn’t the White House? "I do believe we need to do more on our own here in America to deal with some of the... pressure points," said president Clinton about the current energy crisis. Is he really that out of it? America needs straight talk and immediate action not more smoke.

About the Author

John M. Curtis is editor of OnlineColumnist.com and columnist for The Los Angeles Daily Journal. He’s director of a Los Angeles think tank specializing in human behavior, health care, political research and media consultation. He’s the author of Dodging The Bullet and Operation Charisma.

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