OPEC Rising

Originally published at IntellectualCapital.com
By K. Daniel Glover

Reform Party presidential candidate Patrick J. Buchanan speaks contemptuously of “a global conspiracy … to loot the American nation.” House Majority Whip Tom DeLay (R-TX) chides the Clinton administration for an energy policy that “puts America in the humiliating position of having to go groveling” for help. Liberal pundit Michael Kinsley condemns “a price-fixing conspiracy of textbook purity” and urges the government to regard the alleged profiteers as “criminal.”

That is just a sampling of the vitriol so prevalent in today’s world of ever-increasing gasoline prices, and much of that hostility is directed at one entity: the Organization of Petroleum Exporting Countries.

The 11-member cartel of oil-producing nations, on the verge of collapse when oil was selling for $10 a barrel not so long ago, suddenly finds itself as Public Enemy No. 1. The animosity is apparent along all points of the political spectrum and among consumers as well as policymakers. So loud has been the outcry that the House felt compelled to cast a purely symbolic vote March 22 to “send a message” to OPEC. The 382-38 vote was on a bill, ridiculed as “feel-good fluff” by some Democrats, requiring the White House to review OPEC pricing practices.

OPEC decided this week to boost oil production by 1.7 million barrels a day, nearly half the 4 million barrels a day in output its members had trimmed in the past year. If, as expected, that decision stabilizes the oil market and drive prices down, the anti-OPEC ire in America may ease.

But a seemingly ascendant OPEC, which could change its mind and cut oil production at later meetings, continues to pose diplomatic, political and potentially economic challenges for the United States. The question is whether U.S. policymakers can do anything to prevent OPEC from flexing its oligopolistic muscles — or whether they should even try.

The risks of oil diplomacy
On both questions, oil-industry observers and economists tend to agree: The United States has little, if any, ability to influence the decisions OPEC — whose membership consists of Saudi Arabia, Iran, Venezuela, Kuwait, the United Arab Emirates, Qatar, Iraq, Libya, Algeria, Nigeria and Indonesia — makes about how much oil to put on the market.


The Strategy Behind Stockpiling Oil

Originally published at IntellectualCapital.com
By K. Daniel Glover

When Gwen Ifill quizzed Howard Metzenbaum about rising gas prices on a recent segment of PBS’ NewsHour with Jim Lehrer, the former Democratic senator and now chairman of the Consumer Federation of America was unwavering in his analysis of the issue. “[T]here’s only one solution” to the current “crisis,” he insisted: opening the spigot to the United States’ Strategic Petroleum Reserve and flooding the market with millions of barrels of oil every day to “break the hold that the Arab oil nations and the OPEC nations have on the American economy.”

Business Week congressional correspondent Lorraine Woellert, on the other hand, questioned such logic in a March 6 column rejecting the calls of then-presidential candidates Bill Bradley and John McCain to tap the reserve. The nation’s 565-million-barrel petroleum stockpile, she said, is “the nation’s first line of defense against an interruption in petroleum supply in a real emergency. But it’s of little use against a cartel of the world’s biggest crude producers when the world oil market tightens, as it will do from time to time.”

If the debate sounds familiar, that’s because it is. Ever since Congress created the Strategic Petroleum Reserve as part of the broader energy policy it adopted in 1975, lawmakers, lobbyists and the oil-hungry American public have bickered about the best time to use it. No consensus is likely now or ever, but some historical perspective may shed light on exactly what strategy Congress had in mind 25 years ago.

From oil producer to oil consumer
Although the petroleum reserve itself was born between the twin oil crises of the early and late 1970s, the idea itself did not originate amid crisis. (Former Interior Secretary Harold Ickes advocated one as early as 1944, as did Presidents Harry S. Truman and Dwight D. Eisenhower.) It was, however, based on fears of militarily and economically debilitating disruptions in the nation’s oil supply.

The potential for disruption was hardly a concern in the 1950s and for much of the 1960s. Petroleum booms in the Middle East glutted a worldwide oil market that had faced shortages just after World War II. America and other countries had access to an almost unlimited supply of oil for importation — so much so that the U.S. oilmen sought, and received, tax breaks, quotas on imports and assistance for oil exploration.

Days before he left office in 1959, though, Eisenhower invoked his authority to make the previously voluntary import quotas mandatory because of a concern that the growing supply of imports threatened national security. And by the late 1960s, oil industry observers began to predict a supply crisis.

Immigration Inconsistency

Originally published at IntellectualCapital.com
By K. Daniel Glover

In early February, Federal Reserve Board Chairman Alan Greenspan suggested that policymakers consider increasing legal immigration in an effort to offset the pressure for higher wages inherent in a low-unemployment economy like the one America now enjoys. Days later, the AFL-CIO reversed its 15-year support of sanctions against employers who hire illegal immigrants and instead advocated amnesty.

The Immigration and Naturalization Service, meanwhile, has strengthened its border patrols but at the same time has curtailed its efforts to deport illegal aliens who manage to join the American workforce. Deportation arrests have dropped from about 22,000 two years ago to 8,600 in 1999, according to a recent New York Times story. On March 9, furthermore, the Senate Judiciary Committee voted to raise to 195,000 the annual H-1B visas available to skilled workers who come to the United States to fill much-needed high-technology positions. If enacted, the bill would triple the cap placed on H-1B visas three years ago.

Together, those developments indicate a recently rediscovered appreciation of immigrants’ economic value. But combine them with Americans’ often apparent anti-immigrant mentality that manifested itself most recently in passage of a California initiative denying public aid to immigrants, and the clear message about U.S. immigration policy seems to be this: We will open our gates to “your tired, your poor, your huddled masses” when we need their help and slam them shut when we perceive them as a burden or a threat to our own economic well-being.

Land of (limited) opportunity
History lends credence to the conclusion that the American mindset about immigrants, as viewed through an economic lens, is indeed inconsistent. The same country that prides itself on being “a nation of immigrants” and on providing economic opportunity to people who cannot find it at home also has a record of hostility toward foreigners who compete with the natives in the job market.

The tradition of advertising America as a land of opportunity began with the colonies in the 1600s. Pennsylvania settler William Penn printed promotional literature in several languages in an attempt to lure newcomers. With each expansion of the nation’s borders — the Louisiana Purchase in 1803, the winning of the Spanish and Mexican territories, the annexation of Oregon — the nation relied heavily on immigrants to help settle and farm the land and to build the infrastructure of canals and railroads.

During and after the Civil War, U.S. consuls to Scandinavian countries provided aid to the American Emigrant Co. to ease a miner shortage. State governments established offices and commissions to recruit immigrants and sent agents to U.S. ports.

Who Needs The Media?

Originally published at IntellectualCapital.com
By K. Daniel Glover

Politics, politics, politics. Much to the dismay of our wives, that is what a fellow West Virginian (and now fellow transplanted Virginian) and I debate almost every time our families socialize. And inevitably, our conversation turns to the mainstream media and how poorly they cover the political world.

Brent is about as conservative a Republican as you will find — even his six-year-old daughter says she can “hear the ‘rats’ in Democrats” and wonders if her teacher, who thinks Arizona Sen. John McCain is a Republican, watches a different television than her father — so he often rants about “the liberal media.” Non-liberal media outlets may exist, he says, but the masses get their news from less-than-objective journalists like Sam Donaldson and Dan Rather and thus often are misinformed.

I consider myself a fairly harsh media critic, and after more than a decade in the news business, I even agree that too many journalists’ liberal view of the world influences their political coverage. But my pat answer to Brent’s complaint is this: Forget the mainstream media. In this information age, we voters can and should take the initiative to explore political candidates’ views and the issues of the day on our own.

Journalism unplugged
One of the best places to turn is C-SPAN. That cable system pioneered the unfiltered approach to political and policy coverage in the late 1970s, and its Campaign 2000 coverage, available via cable or the Internet, continues an admirable two-decades-old tradition.

At its Web site, voters can watch the speeches and interviews of all the candidates, including those no longer in the race, and an array of campaign events, among other things. And unlike most media organizations — whether print, broadcast or online — C-SPAN does not discriminate against the lesser-known candidates.

Voters who rely on major media for campaign news probably do not know the presidential race extends beyond the five leading Republican and Democratic candidates still in the race. C-SPAN’s links, on the other hand, will take you not only to the Web pages of experienced third-party presidential candidates like Reformer Pat Buchanan and the Green Party’s Ralph Nader, but also to the Internet homes of the Constitution Party’s Howard Phillips and Socialist David McReynolds.

C-SPAN is one of the few places where you would you learn that there is a contested race for the Libertarian nomination. And only C-SPAN is likely to invest the time and equipment to tape events like the Feb. 20 presidential debate among the Libertarian candidates — or even the Jan. 26 New Hampshire debate among “alternative” candidates like Jim “Run Some Idiot” Taylor, who earlier this year sought unsuccessfully to question Democrat Bill Bradley at a campaign-finance forum in New Hampshire.

What C-SPAN pioneered, the Internet has perfected. Even C-SPAN’s coverage has its limits, but with the Web, candidates can take their messages more directly to the people. They need not convince any editor or producer of the merits of their campaign events or views; instead, they can spend a minimal amount of campaign cash to hire a webmaster and post whatever they want for the world to see.