by John M. Curtis
(310) 204-8700

Copyright September 25, 2000
All Rights Reserved.

nswering the wake-up call, President Clinton tapped 30 million barrels of oil from the Strategic Petroleum Reserve, attempting, if nothing else, to stem the current spike in soaring energy costs. Attacking Clinton’s move as purely political, "Now that we are 46 days away from the election, they’ve changed their minds. I agreed with them that it was a bad idea in the past, and still think it’s a bad idea today," said Republican presidential hopeful George W. Bush, insisting that the Strategic Reserve should only be used in a "national emergency, a national war" and following his father’s lead when he dipped into the reserves during the Persian Gulf War. While 30 million barrels seem like a big gulp, it represents only 5% of the total 571 million barrels stored beneath the surface in salt domes in Texas and Louisiana. Americans currently consume about 19 million barrels a day. Like so many other symbolic gestures, Clinton’s move reminded petroleum markets that the wild speculation driving up prices to unprecedented levels can’t last forever. With winter approaching and heating oil prices going through the roof, what was Clinton supposed to do—nothing?

       "Ten months ago, the President and Vice President thought it was a bad idea to release oil from the Strategic Petroleum Reserve," said Bush on the stump in Tampa, Fla., pointing to 'proof-positive' of Clinton’s political motives. Countering that view, "This is not political," asserted Energy Secretary Bill Richardson, "We need to make sure that American families are warm this winter." Whether politics played a part to Clinton’s move is anyone’s guess. Every positive move the President makes between now and the election will be discredited by the opposition as political, hoping to make some hay in a nip-and-tuck presidential race. All the White House’s mistakes will also be conclusive proof of the administration’s incompetence. Taking a bird’s-eye view, decisive measures to deal with the current national energy crisis don’t seem out of line. Failing to act sends a dangerous signal to foreign energy suppliers inviting them to gouge their best customer. Sure, positions change over time but so do circumstances, especially now that average Americans and businesses are flogged at the pump.

       When the oil shocks hit in the mid-'70s, the snowball effect fueled the worst inflation and stubborn recession in post war history. Keeping the economy rolling has more than political implications. While it’s easy to dismiss every move as political, good management requires preempting catastrophes before they occur. Digging into the Strategic Petroleum Reserve was based on the idea that runaway fuel prices could trigger another bout of global inflation, eventually plunging the U.S. and world economies into recession. There’s only so much the Federal Reserve can do to prevent recession. Unlike the administration, they don’t have tools like the Strategic Petroleum Reserve—other than manipulating monetary policy—to stave off economic disasters. With the price of oil hitting $38.00 per barrel, Clinton’s move sent a loud signal to petroleum markets that the current feeding frenzy can’t go unabated.

       Sliding to $32.00 a barrel, Clinton’s move served notice to OPEC that the U.S. won’t tolerate artificial production quotas driving prices into the stratosphere. While it’s tempting to politicize the issue, it’s high time that the administration draw its line in the sand against OPEC, whose price per barrel averaged just $12.00 two years ago. Reducing production and driving up prices was an old tactic used to hold the West over the barrel back in the '70s when Americans were brainwashed by the oil industry into believing that the world faced irreversible shortages. Twenty years ago, independent presidential candidate John V. Anderson predicted worldwide scarcity and skyrocketing costs. Only Republican candidate Ronald Reagan reassured nervous consumers that the government and oil industry were still drowning in oil, and responsible for the energy crisis. Twenty years later, OPEC and the fossil fuel community are up to their old shenanigans with all the smoky talk about worldwide shortages and excessive demand.

       Opening up a new dialogue about conservation and alternative fuels doesn’t begin to deal with OPEC’s manipulation of world oil markets. Why is it OK for OPEC to strangle energy supplies but it’s not OK for the U.S. to defend itself by opening up the oil spigot? All the lassez faire chatter can’t ignore the fact that the U.S. is currently under siege by foreign oil suppliers. OPEC doesn’t subscribe to free market capitalism. They’re the earth’s most powerful monopoly playing hardball with the world’s economies. Cheney’s cavalier comments about world oil prices roiled consumers begging for some kind of relief. Yes, in the best of all possible worlds, market forces should take care of themselves. We forecast hurricanes, why shouldn’t we do a better job with energy and world economies? Countering OPEC’s latest squeeze by releasing a measly 30 million barrels doesn’t threaten national security—it safeguards it. When Alan Greenspan ratchets up interest rates to combat inflation, most politicians don’t accuse him of meddling in free markets. Politics aside, Clinton’s intervention—with or without Gore’s approval—was a shrewd countermove designed to stabilize frenzied petroleum markets.

       Watching oil prices drop—at least temporarily—provides some vindication for Clinton’s bold move to counteract OPEC’s undeniable strangulation of world petroleum supplies. Providing some relief to soaring home heating oil prices, tapping the Strategic Petroleum Reserve served notice that the U.S. won’t sit idly by while energy producers and multinational corporations gouge consumers. While the industrial world has seen its demand rise, they’ve also witnessed a precipitous drop in OPEC’s output in order to deliberately drive up prices. Having tripled the price of oil in the last 2 years, it’s time for energy producers to reverse gears and increase production. Tapping the Strategic Petroleum Reserve was the only way the U.S. could rattle OPEC’s cage. While the political beat goes on, it’s still Clinton’s job to protect the economy and national security. In case anyone’s noticed, he’s still getting it done.

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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