George Bush’s Crude Approach to Energy Policy

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Watching George Bush in Wednesday's Republican debate in New Hampshire, I was reminded of what H. L. Mencken once wrote of Warren Harding: "No one on this earth has ever heard him say anything intelligent. No one has ever heard him repeat an intelligent saying of anyone else without making complete nonsense of it. In the coining and dissemination of words that are absolutely devoid of sensible meaning, in wholesale emission of sonorous and deafening bilge — in brief, in the manufacture and utterance of precisely the stuff that the plain people admire and venerate — he has no peer under Heaven."

Consider Bush's riff on energy policy. Here we have an oil-state governorsuggesting that exploitation of oil reserves in Alaska would help shield usfrom OPEC price manipulation. That is sheer nonsense. Oil is a globalcommodity, and cutbacks in the Persian Gulf supply would affect the price ofAlaskan crude just as surely as they would affect the price of Saudi crude.The idea that "oil independence" protects us from OPEC is the idea of astudent who slept through Econ 101.

The governor then made a point of opposing the use of the 600-million-barrelfederal Strategic Petroleum Reserve to dampen domestic oil prices because,he said, the SPR should be reserved for national emergencies. Like what?Short of a naval blockade, there is no way to keep foreign oil out ofAmerican refineries. Under Bush's doctrine, the SPR, which was filled atthe inflation-adjusted price of something like $65 a barrel, would never beused. Virtually every independent assessment of the SPR concludes that it'sa white elephant, destined never to be used and serving no real purpose.Why not sell some of it, save a little money for the taxpayer, and dampenthe creeping increase in oil prices?

And then there's the conflict between Bush's assertion that OPEC productioncutbacks are driving up prices (true) and his belief that "Big Oil" ought tobe investigated for price gouging and profiteering. Well, which is it? Ifthe price increases are indeed due to reductions in Persian Gulf supply, whyblame "big oil" for passing on costs to consumers?

Regarding OPEC, the Texas governor asserted that he could "jaw-bone" itsmember states and convince them to increase production. Question: When hasbegging OPEC to increase production actually increased production? Answer:Never. If there's one thing that the last 30 years should have taught us,it's that OPEC nations are profit maximizers. They have always made — andwill always make — oil production decisions based on how much they expectto gain. Believing otherwise simply debases American foreign policy andleads us down blind alleys.

Now, let's imagine for the sake of argument that "Big Oil" companies areindeed keeping oil off the market. The only reason they would do so wouldbe to sell that oil when prices are even higher. In other words, they'd bestockpiling for a rainy day. Well, what's so wrong with that? Don't wewant oil companies to stockpile reserves so that consumers have access tooil when supplies become tight? Oil companies don't normally maintainstockpiles because they fear that some shameless demagogue like George Bushwill set the mob upon them the minute they try to earn a profit from theirfar-sightedness.

Then there was the gratuitous support for the Low Income Housing EnergyAssistance Program, a Carter-era program that helps the poor pay theirheating bills. The governor defended it because New Hampshire households —unlike most of the rest of America — still rely largely on oil for heat,and oil price increases hurt them more than most. But studies show thatpoor Americans not benefited by LIHEAP spend about the same percentage oftheir income on energy as do poor American benefited by LIHEAP. That is tosay, with or without LIHEAP, poor people will spend about the same amount ofmoney on their utility bills. LIHEAP, then, is simply an income transferprogram — another kind of welfare check. If we're going to hand out moneyto the poor, why not do it aboveboard, not through a thousand backdoorchannels where administrative costs drain away most of the money?

Of course, George Bush is not alone. Few politicians ever say anythingsensible about energy policy. What truly amazes, however, is that thisdensely packed nonsense pertains to one of the main industries of his homestate — an industry of which he used to be part. Of course, it's perfectlypossible that Bush does not believe a word of what he said, but hispolitical instincts tell him that that is how one gets votes. He's either aClinton, then, or a Harding. We'll find out as the primaries continue.