"He's
a Texas oilman through and through and is joined at the hip with
big oil."
— Doug Hattaway, Gore campaign spokesman on George W. Bush,
June 2000
multi-billion dollar consumer fraud brings very little comment these
days, but the wall of silence cannot obscure the ugly economic facts.
The fortune that Big Oil paid to elect George Bush and Dick Cheney
— two oilmen from Texas — was poured straight down the
crank-shaft. Enron has gone bust, Haliburton is gasping, and oil
prices have plummeted. The Republicans, puffing up as the party
of family values, have succeeded in brutalizing their own Siamese
twin.
With the economy
slowing and the Russian oil flowing, pump prices have gone into
free fall. Since George W. Bush was sworn in, wholesale prices have
dropped from over $30 per barrel to just $20. A gallon of gas has
now dipped to below $1 in parts of the country. Since about $0.45
a gallon tax is included, petrol for that SUV now costs a modest
fraction of a comparable jug of Pepsi or Evian. Millions of American
motorists are thrilled to see the bargain prices, but the vast majority
of these consumers contributed not a dime to Bush-Cheney 2000. The
energy capitalists who did are clearly getting hosed.
Even as the
macro-economic indicators begin to signal a turnaround, oil company
shares up-tick not. The Standard & Poor's Energy Index has declined
18% since the Texas Governor was elected president (index returns
from the October 31, 2000 to December 11, 2001). Of course, the
overall market has performed poorly during this period. Yet, those
shares that were supposed to benefit the most from having a commander-in-chief
in their pocket have met with disaster. Halliburton, Dick Cheney's
former firm, has lost over 61% of its value since Election 2000.
And Enron, whose CEO was tagged by the press as Pres. Bush's biggest
and most generous supporter, is testing the hypothesis that 100%
is the maximum share price decline. The firm's market cap has dropped
$56.5 billion, as $80 equity shares now sell for $0.65 — give
or take a nickel.
Does government
have an obligation to protect innocent contributors to the democratic
process from such outrageous consequences? Or should affluent oilmen
be considered smart enough to protect themselves — caveat emptor?
Before you
duck into the closest caveat, let's review some historical data.
It seems that the wily country gentlemen have been plucked in this
Republican con game before — repeatedly. Oil prices rose wildly
under Jimmy Carter and handsomely under Bill Clinton; they crashed
during the Reagan-Bush years, and have again dipped deep during
the new Bush administration.
Perhaps the
oil barons are confused by ubiquitous press reports heralding a
close kinship between the party of Lincoln and J.R. Ewing. But the
pundits are often wrong when it comes to energy economics. In 1981,
the Reagan administration's decision to deregulate wholesale gas
prices was widely attacked by editorialists as anti-consumer, pro-oil.
In fact, prices quickly fell from very high levels (in Dec. 2000
dollars, a barrel of oil was selling for over $70 in early 1981),
and kept declining through mid-decade. Allowing wholesale charges
to float actually reduced pump prices by bringing more gasoline
into the retail market. Price deregulation actually produced enormous
consumer savings, allowing Reagan's White House tenure to coincide
with an amazing $54.70 (or 70%) drop in the price of a barrel of
oil.
Now the White
House has another set of pro-consumer options: supply stimulus.
It already has its sights on opening up portions of the Arctic National
Wildlife Refuge for oil production, and is aggressively pursuing
Russia as a strategic and economic partner. The Russians, with American
help, may soon play the Great Crude Satan to OPEC, price-cutting
on the cartel. Other foreign policy initiatives, especially those
eliminating trade barriers for African states beginning to tap their
oil reserves, could also pay dividends.
If the petrol
magnates who reportedly hand-picked Mssrs. Bush and Cheney for high
government service successfully compete for these new opportunities,
their firms' share prices may yet rebound. But, such new supplies
will prevent corporate profits from enjoying much of a bounce from
price hikes. Out of respect for their beleaguered shareholders,
Big Oil ought learn: the GOP is no gusher.
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