OIL INDIGESTION:
Goodman, James A.
1 OIL INDIGESTION JAMES A. GOODMAN For years, the magic words 'national security' shielded...
...Consequently, a 1950 Treas- now classified as "old oil" (the amount below 1972 ury Department decree enabled American-owned oil production figures...
...that is, providing for January 25, 1974 the needs of the American consumer as well and fully as possible...
...If this marriage between us how warm is the winter and cooperative the con- Big Government and Big Oil continues, "Project Indesumer...
...In addition, 28 Congressional conception that the "public is victimized" and comcommittees have delved one way or another into the plained of the "blame syndrome" sweeping the country...
...Senator domestic and foreign markets more often than not is Henry Jackson later confirmed a December 1, 1973 dictated by the same companies immune from any mech- article published in Business Week which describes a anism of supply and demand...
...Labor The likelihood of an "interested person clause" which Department statistics claim that an estimated 100,000 would allow individuals to challenge energy prices be- layoffs occurred in the second week of December from fore a federal Renegotiation Board has been stymied by the energy crunch and recent reports tell of a current stiff Presidential and Congressional resistance as has total of 241,000 job cutbacks resulting from the crisis...
...Gulf, 153 percent...
...We had expected moderate shortages of Of heroes, and sympathy energy this winter, but four weeks ago, when war broke out in the Middle East, most of our tradi- For troubled tional suppliers in that area cut off their shipments Heroes who failed of oil to the United States...
...the everlasting Middle East-told Congress an "energy crisis" beset Memory of him the country: Unfortunately, the energy crisis that once seemed That will stir and stiffen a distant threat to many people is now closing upon Me into memory us quickly...
...K. Jamieson, Chairman of Exxon "empty...
...Around the Arabian American Oil Company that reaches this country as well as any added expendi(Aramco) and the Iranium Consortium, the State De- ture for domestic production is merely passed on to the partment hoped to ward off Soviet penetration into consumer...
...Last spring, when a shift in refining priorities by the oil companies turned the win- MARILYN THOMAS ter's fuel shortage into a spring gas shortfall, the President's April 18 message called to our attention the HOW SHALL I ASCEND FROM THE DEEP "energy challenge" we all face and hoped we would rally around the Nixon flag...
...Disclosure proposals have Monthly unemployment rose from 4.8 percent in Debeen watered down, and the Nixon's misnomered "wind- cember to 5.2 percent in January...
...The axiom that Nixon and the oil majors share the same axis is substantiated by a reading of Nixon's 00000000000000 energy policy statements...
...forces stationed around convinced that foreign oil would not endanger the do- the world...
...the bite of any tax reform...
...Testimony before the Church committee tells how Exxon Furthermore, a study by the New York Times (Decem- ignored Occidental, a company much smaller than Exber 9, 1973) reveals that oil products have been hesi- xon, when representatives from Occidental sought assisttant to expand refining capacity for some time...
...cations...
...thermore, unemployment turned sharply upward...
...As early as 1970, a Cabi- November 4 decree by Saudi Arabian King Faisal to net-level task force recommended to the President that the four American members of Aramco (Exxon, Standimport quotas be replaced by a more flexible tariff sys- ard "Oil of California, Mobil, and Texaco...
...Seventy percent of all domestic crude oil is Arabian petroleum fields...
...Furhave hinges on the ability to tackle the energy trusts...
...The autumn of 1970, Qaddafi forced increased taxes and construction of new U.S...
...national security" granted Big Oil in its foreign opera- Moreover, any increased costs tacked on to foreign oil tions...
...oil companies have not heating bill or while you sit in your car waiting for gas been breaking their backs to produce more oil for pub22 March 1974: 56 lic consumption...
...from the previous year's final quarter...
...In the past year, the price of this companies to credit taxes paid to foreign governments government-regulated oil has increased from $3.50 a dollar-for-dollar against taxes paid on domestic oil pro- barrel to the current price of $5.25-with the latest $1 duction...
...Pressured by the oil lobby, Nixon resisted the rec- ordered these companies "to cut off supply of products ommendation...
...In theory, the by classifying these negotiations...
...Barring a mass consumer revolt, the oil compa- pendence" will produce a country dependent on energy nies should emerge from legislative scrutiny with little monopolies by 1980...
...trust waiver) represented a belated attempt by Western The Church hearings have also shed a ray of light on oil companies to counter the growing demands by the the intricate relationship between Big Oil and postwar Organization of Petroleum Exporting Countries (OPEC) diplomacy...
...of Mines statistics, declined both in 1972 and 1973...
...refineries, according to Bureau royalties upon American-owned Occidental Petroleum...
...King Faisal tem...
...Unregulated "new oil" has hovered around $10 a barrel, and if a ceiling JAMES A. GOODMAN is a free-lance journalist whose work has is imposed on this oil, the Federal Energy Office seems appeared in Newsday, the Milwaukee Journal and other publi- bent on holding the price above the $7 mark...
...Texaco, 70 trying to understand a 44.7 percent rise in last year's percent...
...In 1973, for example, by the seven largest oil companies came from overseas the top five American oil companies pulled in $4.5 bilearnings...
...What is needed is energy responmore than a slap on the wrist...
...Not until the emergence of Libyan Colonel Muammar Even more significant, however, has been the failure al-Qaddafi in December, 1969, did the position of Amerof the vertically integrated energy trusts to build do- ican oil producers come under serious attack...
...Beyond an occasional swipe How shall I ascend from the deep silver at environmentalists, a call for the deregulation of na- Death of my father...
...Amidst all the conflicting information that has hit the -Excerpt from a Shell ad newspapers over the last few months, several important The Denver Post revelations should stick in our minds...
...For the first eight months of last year, less lion from foreign investments but paid only minimal crude oil was pumped from fewer new wells in this taxes to the Treasury...
...Absent was His frail passing into earth...
...22 March 1974: 58...
...On November 8, 1973, the President-plagued by Will arise the waves of Watergate and faced with an embroiled Into my soul...
...And if the line is long enough, contemplate News conference the study by the Chase Manhattan Bank which tells January 23, 1974 us that we are supposed to dish out $1 trillion between now and 1985 to lubricate the oil companies so they "Are oil profits big...
...and nervously watching the indicator merge with -J...
...The formation of the London Policy American companies in crude oil and natural gas actu- Group in late 1970 and the Justice Department's Janually decreased between the years 1968 and 1971 from ary 15, 1971 business review letter (in effect, an anti$4,675,000,000 to $3,185,000,000...
...East conflict with fourth quarter earnings up 61 percent Wrong...
...December's conand added bureaucracy seem to be filtering out of this sumer prices were 8.8 percent above the previous Demess...
...won't get unhappy...
...Only when the oil companies seemed derived from Saudi oil to U.S...
...stomach how oil companies suffered through the Middle Big enough...
...While the foreign investments of U.S.-based oil increase granted on December 19...
...Their action has now To prosper at an early sharply changed our expectations for coming months...
...Mobil, 68 percent...
...mestic price of petroleum were the nationally secured Although the Arab embargo theoretically prevents oil import quotas eventually modified...
...any mention of skyrocketing prices, growing monopoli- And then the dust zation of all energy sources and a sense of urgency That inevitably needed to confront the upcoming crisis...
...Remember this figure while you Right...
...Age, but who Nevertheless, several weeks later, the President claimed Passed onto consciousness the vivid to have seen "this thing coming" and pointed the finger Memory of bells...
...By the mestic refinery space to handle increased demand...
...country than during the same period of 1972...
...As a result, Qaddafi was able 1967 and 1972, the increment of daily demand out- to establish the precedent of isolating one company stripped added refinery output by 1.1 million barrels...
...the flood of others that have filled the newspapers in Moreover, despite record fourth quarter earnings by Big recent weeks is over the kitchen table while you are Oil (Exxon, 67 percent...
...excess profits...
...Then, try to "So says the Chase Manhattan Bank...
...1 OIL INDIGESTION JAMES A. GOODMAN For years, the magic words 'national security' shielded the oil companies "We have no windfall profits...
...Moreover, the State Department "National security" provided the rationale for the cre- extended "national security" status to private business ation of the oil import quota of 1959...
...Whatever potency an emergency energy bill might cember-the highest rate of increase since 1947...
...issue...
...However, the year's tally of the effects of the energy Yet, thus far, little more than a stronger executive crisis only added to public cynicism...
...from the others and upping taxes and royalties with In fact, the latest round of the Church Foreign Relations the threat of expropriation always hanging over an oil Subcommittee hearings reports that total investment by company's head...
...The dark tural gas, and end of the 14-year oil import quota (three Driving chimes that will announce years after his task force's recommendation), the message was long in wind but short in content...
...While Big Oil has led a successful counterattack Hugh Scott, maintains that "Unemployment cannot be against its critics, the American Petroleum Institute- effectively dealt with by a system that seeks to find a the chief oil lobby-has only replied to Representative tenuous (my italics) connection with the energy criLes Aspin's query why heating oil prices continue to sis...
...Between ance to resist Qaddafi...
...1972 was also "How in all conscience the year that oil companies kicked more than $5 million can anyone call these into the Nixon reelection coffers...
...import quota would stop cheap foreign oil from flood- The hypocrisy of the "national security" blanket that ing domestic markets which in turn would stimulate the still shrouds much of the oil companies' operations development of indigenous oil-producing facilities and became most blatant during the latest outbreak of fightprevent a situation of dependency on foreign oil...
...Middle East oil from entering the United States, oil But even more significant was the privileged status companies can and do take their business elsewhere...
...Although the cost of all these ads will "There is no digit on earth less certainly jack up next year's expense accounts, large pertinent to the solution advertising costs are nothing new for oil companies...
...sumer Reports, the six leading gasoline marketers spent -Excerpt from Gulf Oil ad "more than $38 million in 1972 in promotional adverThe Wall Street Journal tising" at a time when oil companies should have been February 13, 1974 devoting their resources to the refining of home heating oil to head off last winter's shortage...
...Justice Department...
...rise if heating fuel stocks are up 28.5 percent compared For too long a time, government policies have sounded to a mere 5.4 percent increase in its demand by telling a note not unlike those oil ads...
...A of the energy crisis than recent Government Accounting Office study shows how `the pointing finger.' oil companies' advertising budgets often rival funds "If there is blame, there is allocated for research...
...There are 64 agencies distributed among nine execuCommonweal: 57 tive branch departments, 15 independent agencies and of blame at the inactivity of Congress...
...Some- ing in the Middle East-a time when the immediate how forgotten was the fact that the development of self-interest of Big Oil seemed in jeopardy...
...By January, the Executive Office of the President involved in some energy czar William Simon spoke of the widespread misaspect of the energy crisis...
...sive to the consumer instead of the trusts...
...reconcile these differences by reading that omnipresent -Excerpt from a Mobil ad Shell ad that reassures the consumer that "we have The New York Times basically the same ends in mind...
...First off, it's no January 18, 1974 longer a trade secret that the world is not short of crude oil-at least not yet-but rather there is a shortage of Perhaps the best time to digest these statements and fuel oil and gasoline refined from the crude substance...
...But despite these fall profits tax" would be nullified by its "plowback" figures, the President, in a January 29 letter to Senator rider...
...For years, the magic words "national secur- and an abdication of regulatory responsibility by the ity" shielded the oil companies from public scrutiny...
...And according to January's Concertainly enough to go around...
...The bulk of last year's 46 percent in- multinationals brought back bountiful returns, their bills crease in profits (from only a 6 percent growth in sales) to the Treasury shrank in size...
Vol. 100 • March 1974 • No. 3
