The Politics Of Oil

...Engler himself goes out of his way to admit their force...

...Such a resource cannot be allowed to be developed irrationally or subjected to the free play of market forces...

...hibited where not absolutely stifled...

...As for competition, Engler makes clear that the supposed independence of the "independent" producers, the jobbers, the retailers, the wildcatters, and the rest who make up "little oil," is most often illusory...

...By certain standards, it is true, the power of the oil industry may often militate against our concepts of the ultimate well-being of the community...

...This oil "foreign policy," furthermore, is given greater weight by the fact that the majors are part of a world-wide cartel system...

...and in this connection, Engler discusses several instances which suggest a good deal of outright state government corruption...

...the public relations activities of the majors particularly have been of uncertain value to them...

...It may very well be, of course, that further investigations such as Engler's would show that his analysis does not apply elsewhere...

...Of course, as Engler is obviously aware, money does not talk quite as much in our society as we sometimes fear, and as the industry would perhaps like it to...

...But at this point, given the strength of his work, I think it is incumbent on those who assert that pluralism is and will remain a reality to offer some evidence for their theory, evidence as impressive as Engler's, and at the level of policy-making and social control with which he deals...

...leasing arrangements with regard * As for the trustworthiness of Engler'sdata, a review of his book in the National Petroleum News Bulletin, a semi-official industry-wide newsletter, describes itin the following terms: "It's a...

...Needless to say, concepts of the national interest are at times of only secondary concern to such a "government," while the international outlook thus created is limited to visions no broader than those of profit-making and stubborn resistance to radical social change...

...Otherwise, the theory of liberal pluralism may simply be the means by which American scholars and intellectuals give up the idea of real reform altogether, and stand by ap provingly as we plunge willy-nilly into the pseudo-pluralism of a centralized corporate state...

...Similarly, the political situation of American citizens is, after all, far from being one of subjection to "total" social control: there are major areas of social life which the industrial giants, whether in oil or elsewhere, simply make no effort to integrate into their "planned economy...

...close to 50 per cent of tanker traffic...

...They are aided, moreover, by a line of advisory committees, under various titles, which due to their presumed sole possession of the necessary expertise, have formed virtually an autonomous policymaking body within the national government—bodies that were and are really accountable to no one but the industry itself, and more specifically the majors...

...to exploration (most wildcatters, Engler points out, are secretly backed by the majors...

...The answers to this question must to a large extent vary with the values of the observer...

...I do not think a convincing case has yet been made that these findings are useful when brought to bear on the more complex area of national institutions...

...For as he demonstrates at length in the historical sections of his book, the most striking thing about such attempts at "balancing" public and private power has been the relative ease with which the majors have taken over government policies and converted them to their own use...

...the inertia of congressional organization is thus heavily weighted against basic innovation...

...Oil as a natural resource is the basic fuel of both modern industry and modern military might, and thus one of the greatest potential prizes of the Cold War...

...With the help of state conservation laws and Bureau of Mines demand estimates, they regulate supply and maintain or increase price levels and have succeeded in doing so through the Great Depression, World War II, the Korean War, Suez, and on through the last decade—even in situations, such as the Suez Crisis, when basic national policies were seriously hampered as a result...

...They have under lease almost 25 per cent of the land area of the United States, together with all subsoil rights...

...Positions in the government relating to petroleum policy have invariably been held by men with close connections in oil, usually in "Big Oil," who see nothing wrong in representing "two masters" at once (the appointment of John McCone as Director of CIA is but the latest example...

...The result of all this has been at times complete control by private persons of public policy and government activities relating to oil, during the New Deal period, World War II, and the semi-permanent post-Wax crisis...

...It is quite possible, I think, to describe that price as exorbitant, and not worth paying...

...Furthermore, the majors have successfully stifled attempts at competition through product innovation, whether private or governmental, thwarting the development both of synthetics (even during World War II), and of shale oil pools, where they themselves could not control the process...

...At the same time a sort of underground movement, led by Robert S. Lynd and the late C. Wright Mills, has attempted to revive the now old-fashioned critique of power in a capitalist society, while avoiding the more obviously dated cliches of 1930's Marxism...

...As he convincingly demonstrates, the major companies have consequently attempted to build what can be described as essentially an integrated and "planned" economy...

...It is possible, of course, to argue that the present system does not inherently produce such results, and that what is needed is simply "better," more "liberal" government...

...Most of these, moreover—especially accelerated depreciation and amortization programs, as well as the depletion allowance itself—further existing patterns of control within the industry...

...tax, regulatory, and especially proprietary activities of the national government have been distorted away from their basic purposes...

...What we might say is that the area of economic well-being and formal political freedom that is maintained by a pattern of privately controlled industry comes at a price...

...they have, further, continually warned each other that if they did not take such action the govern...

...For its own purposes, the oil industry has coopted the national government in key areas of regulation and performance...

...Yet it is also clear that the industry is efficient enough to enrich the material lives of almost all those who come into contact with it or use its products, and this achievement, as Engler emphasizes, cannot be easily dismissed...

...In Engler's phrase, " (It) has harnessed public law, governmental machinery, and opinion to (its) ends...

...industrial civilization demands them...

...Regulation" will turn into "partnership," "partnership," gradually, will turn into a state of affairs approaching private control of government: the regulated will become, as they have in the past, the regulators...

...This policy not only competes with that of the national government—as in the opening stages of World War II, when the industry engaged in activities which may at best be called unpatriotic...

...Those who assert the primacy of a particular class or group often seem to be open to the charge (made by Robert Dahl with regard to Lynd and Mills, for instance) of going beyond their own evidence to make up hidden bogeymen of power, whose existence can be neither con firmed nor denied scientifically...

...As Engler puts it, the pattern of industrial organization has created virtually a sovereign entity, which has appropriated broad political powers that are exercised without any accountability to the electorate, and which "directly challenge (s) public rule...

...Under the impact of the Cold War, as Engler rather sadly points out, American liberalism has apparently lost even the drive it had at the height of the New Deal (when it was still unable to control oil policy), and partakes more and more of the same corporate spirit as do the industrial managers...

...for it is these activities which bring what I have said is Engler's fundamental question—"Who governs...

...To take but a few examples, the majors control transportation channels (90-95 per cent of the pipeline network...

...In any event, here as in the general area of foreign and national security policy, Congress' role seems to be more and more a negative one...

...with which the "welfare state" has been turned into a boodle and the political power attendant on its possession, going to those who already are at the top of the heap...

...On the other hand, judged according to strict standards of evidence the critics have until now been at least equally unconvincing...

...there is at least one case described in great detail by Engler where public documents were suppressed...

...For Engler's book very obviously contains implications that take a careful reader well beyond the bounds of the oil industry itself...

...The oil industry has been the subject of intensive study before, especially by E. V. Rostow and Harvey O'Connor, but Engler has gone beyond both of these previous works...

...They account for 80 to 90 per cent of the American industry which in 1961 had gross assets of over $60 billion...

...By comparison, those engaged in the kind of studies which are associated with pluralist theory—studies of small towns, interest-groups, etc.—are using material which is more amenable to study and experimental manipulation, and which often leads to optimistic findings about the problem of power...

...As such, they extend their quasi-sovereign powers of economic regulation and policing, innovation control and resource development, beyond the boundaries of the United States, to a degree which leads Engler to conclude that they are part of "a system of arrangements and understandings that may be called the first world government...

...But I think it fair to suggest, even without considering the largely impressionistic literature that has grown up around Mills' The Power Elite, that such a view is strikingly sanguine...

...I have to saythat [it] appears to be a very substantialdocument...

...The "liberal" way of doing things simply does not encourage the development of experts trained solely as public servants...

...This "government" has gone so fartoward formalization that in the case of Esso it includes a private court systemfor hearing retail dealers' franchise complaints...

...Here, clearly, we are in the realm of hypothesis...

...In this context, therefore, the publication of Robert Engler's The Politics of Oil* represents a major breakthrough for the critics of liberal ideology...

...A. A. Berle, for example, has at times seemed to suggest that such a pattern exists (though more often he seems to argue that it ought to exist...

...In addition and, in the era of permanent crisis even more important, the majors have over the years created their own foreign policy (and even foreign ministry...

...The problem is one of social structure as a whole—a point to which Engler continually returns...

...This sham independence rests on the majors' sense of self-restraint in the face of a potentially hostile body of public law which is itself often held in abeyance...

...The industry receives, directly and indirectly, an astonishing number of subsidies that go well beyond the depletion allowance both in scope and size...

...ment would step in and do it for them...

...The attempted government development either of special oil deposits or of competing resources has been in...

...It also on occasion simply supersedes it, or rather becomes it, so that the foreign policy of the United States (in the Middle East most graphically, but elsewhere as well) is to all intents and purposes made by the majors rather than by the State Department...

...that policy is then the haphazard resultant of the collision of these various forces...

...sponsored policies...

...For over a decade American social scientists have been developing a theory of political pluralism which claims that real political power is parcelled out, more or less equally, among the various groups and classes of American society...

...Congress is the repository of whatever antimajor sentiment exists in the national government, but over the years key committees have been given over to men who virtually represent the oil industry...

...so-called public bodies such as the Texas Railroad Commission function as industry handmaidens...

...As wielders of such a vast range of private economic powers, the majors form what Engler accurately describes as "the private government of oil," which has managed to eliminate both "consumer sovereignty" and (in E. H. Carr's suggestive phrase) the "nightmare" of competition...

...But in general, wherever there is public or official support that can be bought, other private pressure groups, as well as government itself, are unable and often unwilling to compete with oil...

...is his richly empirical and impeccably documented presentation of the thesis that the great oil corporations exercise private and centralized power which is unchecked—out of "balance," to use a favorite phrase of pluralists —with respect to American society as a whole...

...dealer franchises at the retail end...

...into sharp focus...

...ment, a multitude of competing selfinterested semi-public pressure groups, and the other appurtenances of liberal democracy, does not accomplish in practice what it is supposed to in pluralist theory...

...Engler's lengthy documentation of this point shows that no administration has been an exception, despite the dedicated efforts of public servants like Harold Ickes and Leland Olds...

...In our kind of society, many manifestations of "state" activity in reality are only the actions of a collection of private persons with at best mixed public and private interests, at worst solely private interests...

...A liberal critic might reply, of course, that the oil industry may merely be a flamboyant exception to a general pattern of successful democratic public control of large-scale industry in the United States...

...Nor does this pattern seem likely to be broken...

...Those whose interests conflict with the majors are shown to possess little leverage at any level of government...

...More important, how can government, in a society which continues to exalt private action and private motives, effectuate controls which can really work only if the mythology of the "private" individual is downgraded...

...The publication of his work is therefore a significant event...

...School systems and universities are made into industry adjuncts...

...In any case, how can a government which is willing to exert itself only haltingly and partially—given the ideology of American welfare capitalism —regulate such a concentration of private economic power as the oil industry...

...and basic research...

...For as Engler shows, private industry tends toward the formation of its own "government," and one that has no such ideological compunctions, and no lack of expertise under its own command...

...candidates who would oppose oil-sponsored policies find themselves lacking funds to campaign...

...and which controls the pace, techniques and philos ophy of development and distribution of this basic resource, with little hindrance even from the national government.* But the political significance of the nature of this industrial system goes far beyond its mere economic power...

...The character of oil," in Engler's words, "requires full economic coordination and planning...

...His major—and original—contribution, • Macmillan, 1961...

...But it is possible to suggest, as does Engler, a highly critical approach based precisely on an acceptance of the same democratic ideals that the leading theorists of American pluralism themselves propose...

...Such critics, however, have always found extremely difficult the problem of empirical verification, and with it the task of persuading the politically uncommitted...

...Several impressive arguments may be offered in defense of the existing situation...

...it is rather that the public law and the ideology of the American social system give control over vital resources and goods to private "persons," who in turn form an industrial system the maintenance of which in statu quo becomes crucial even to those in the national government who might wish to move toward a more "public" form of control...

...But on other occasions Engler argues more cogently that all such solutions suffer from a fundamental defect...

...The Bureau of Mines, for example, functions as a price-maintaining mechanism for the industry...

...As he points out repeatedly, it is not a malevolent "conspiracy" which has produced the present situation in the oil industry, and in the government which attempts to control it...

...Outside the executive branch of the U. S. government, the pattern of control and deformation of formal political arguments is equally striking...

...Thus, the range of oil's public activities is more important, and in some ways even more impressive, than its private power...

...That price involves, among other things, the unchecked growth of private power, accumulating immense financial resources and lavishing them not only to meet its economic needs but also to set wherever possible the ideological contours of American society...

...For if one accepts the likelihood that an extension of Engler's findings would be valid, it would follow that the maintenance of any system of democratic values demands an entirely different and much more far-ranging attitude toward social change in the United States...

...Engler leaves little doubt that some state governments are "oil governments" pure and simple, despite the fact that not everyone, even in Texas, necessarily benefits from industry...

...They engage in centralized planning activities, not only with each other, but with related and often interlocked firms in other sectors of the private economy...

...Engler's great contribution is to point out not only several factual defects in such a claim, but also some fundamental theoretical considerations about the importance of resource control in a modern industrial society...

...May not this be a satisfactory situation over-all, then, considering the benefits we derive from the present system...

...For example: in an abundant economy, of which oil forms an important part, the lack of some real political and economic choice, at least with regard to one's power to affect the shape of income distribution, may not seem very important...

...In order to maintain its power (and wealth) in an age when centralization of industrial development is almost inevitable, "Big Oil" has striven to insinuate itself into the structure of public government as well, lest (as oilmen themselves continually point out to each other) real authority over such a centralized and planned industrial sector should devolve to its logical repository — the national state itself...

...Engler himself seems at times inclined toward this point of view, and shows a nostalgic fondness for New Deal solutions: greater government regulation, more effective "trust-busting," government "pilot projects" or "yardstick" operations in particular areas of resource development...

...The character of the industrial system which Engler describes in exhaustive detail can only briefly be summarized here.* The majors—the twentytwo interrelated (and interlocked) corporate giants of the oil industry— form both a national oligopoly and one segment of an international cartel which organizes the world's single wealthiest industry...

...By sheer wealth alone, then, the industry purchases an important area of generalized social control, of the kind that we tend to think only the national government possesses...

...heavilydocumented indictment...

...On Engler's evidence, then, it seems that the existence of the free ballot, political parties, representative govern...

...Who determines the powers and policies of our political institutions at the state, national, and international levels, whenever the private interests of the oil industry conflict with public interests...

...By its nature, social power does not operate openly in a society which swears by the myth of popular democracy...

...that state governments, the national government, consumers, the oil "majors," the oil "independents," labor, and industrial giants in other sectors of the economy all come together in a sort of uneasy "countervailing" balance...

...His facts seem impeccable...

...It is confronted with policies that are justified at the level of neces sity, as well as being for the most part faits accomplis...

...In thus studying corporate power as it is actually exercised in the United States, he has met the pluralists on their own "scientific" ground, and has succeeded in casting serious doubt on the value of pluralist theory as a description of the American political system...

...even if it desired to attack the majors' power, Congress could probably do very little...

...The question raised by Engler's study of the oil industry is "Who governs"?—who really governs...

...To take just one example, with regard to which Engler's analysis is quite enlightening, how is the government going to find enough people qualified to participate in oil industry regulation, who do not have private interests in that industry...

...If such is the case, why adopt radical reforms that might weaken the structure of our generally satisfactory pluralist system, solely because one element, or perhaps a few elements, in that system have accumulated an inordinate amount of power...

...Someone must impose controls...

...Thus, the same ideology which insists that government be "balanced" and "limit state—the lion's share of the boodle, ed" by private corporate forces, will, if history is any guide, thwart the attempts of government to control those forces...

...refining and other processing activities (close to 90 per cent...

...Pluralist theorists would tend to say that no one really "governs," in the sense of making final determinations about national—in this case, petroleum—policy...

...It must be said at once that Engler's findings do not exhaust the question of how significant is the power of Big Oil, with regard to the functioning of a democratic society...