All-American Oil


THE OIL CRISIS is a crock. The public has caught on to this truth, and many experts agree. The real crisis is a crisis of political institutions. Nationalization might be a sensible step for a government confronting corporations that now behave with the arrogance of mighty sovereign nations. But officials never even debate the merits and drawbacks of nationalization; it's outside the narrow range of the politically possible. One type of government enterprise with historical precedent is the crash program to cope with a crisis or meet a technological challenge. "Manhattan project" and "moonshot" are ritual utterances for politicians trying to summon the national will.

The oil crisis will not have been a waste of time if it produces an independent national energy corporation to develop our oil resources and to promote alternatives. The oil situation will be an authentic disaster if it ends in a massive giveaway of tax money to the oil companies that would perpetuate their control of our energy supply for decades to come. It will be devilishly tempting for the government to do obeisance to the private sector and accede to the latter outcome. Our leaders may find the courage to withstand this powerful compulsion in a campaign that brands the oil companies "un-American" and paints a federally-owned oil corporation as an all-American answer. Activists should not be embarrassed about draping their proposals in the American flag. There are a number of ways a publicly-owned oil firm could appeal to traditional American values, and a number of themes activists can and should use to campaign for such a firm.

Some experts believe the end of plentiful oil is at hand, while others foresee a possible glut if energy consumption becomes more efficient. Arnold Safer, vice president of the Irving Trust Company, has said, "Projected world oil shortages are analogous to a 'receding horizon'--no matter how rapidly you move toward the horizon, it is still the same distance away." Certainly the world oil supply cannot last forever. But our current problems stem from a lack of surplus capacity that makes us vulnerable to the slightest production cutback by the Organization of Petroleum Exporting Countries (OPEC). The oil companies have no incentive to develop enough oil outside OPEC to ease the threat of shortage. As long as demand doesn't change, they profit the most by cooperating with OPEC and keeping supply tight.

THE OIL COMPANIES understandably want to maximize their profits, but it is absurd for them to call this process "free enterprise" when a cartel controls the supply. A federal oil corporation can restore free enterprise to the industry, its proponents should argue. The public company could explore domestically, seek out non-OPEC foreign sources, negotiate with OPEC, and serve as a yardstick to force other oil firms to compete. In contrast to the competitive public outfit, the existing oil companies can be labeled monopolistic, centralized private bureaucracies. A private oil company is just as large and bureaucratic as a government agency; with padded profit margins and no competition, it has just as little reason to operate efficiently.

Supporters of a public firm can also call the major private oil bureaucracies disloyal. During the Yom Kippur War and the Arab oil embargo, American oil companies demonstrated they will not put their home country first--they restricted deliveries to the U.S. proportionally more than to other customers. It is simply foolish to leave all control of a commodity vital to our industry and military in the hands of men understandably motivated by profit alone. The traditional conservative concern for national security should be harnessed to support a federal oil company.


In fact, locating oil to stake out for national security reasons would not be difficult. The government already owns much of the oil-rich land in the United States, as well as offshore sites. This property should be heralded as a public legacy--more patriotic grounds for a federal company. The people should oversee and benefit from their legacy rather than continuing today's practice of leasing it away at favorable terms to the private oil bureaucracies. The federal government owns at least half of domestic natural resources, and the same figure probably holds for oil. Ralph Nader likes to tell audiences they already control a majority of American oil resources. A more conservative Ford Foundation estimate several years ago placed the figure for domestic oil and gas at about 40 per cent.

ONE REASON ESTIMATES are so uncertain is that the government has permitted the oil bureaucracies to guard their knowledge closely and has no independent sources of information. The government has often respected estimates of reserves on public lands as the confidential "proprietary information" of the leasing companies. A free and open debate in the American tradition will not be possible on energy issues unless citizems receive accurate information.

In the aftermath of the 1973 oil embargo, a report of the Senate multinationals subcommittee suggested the "over-riding lesson" was that "in a democracy, important questions of policy with respect to a vital commodity like oil, the lifeblood of an industrial society, cannot be left to private companies acting in accord with private interests and a closed circle of government officials." Right now information is the scarcest and most vital commodity in the oil industry. The only way the government can hope to secure a dependable supply of this commodity is to explore its own lands and to enter the market itself.

In 1973, U.S. oil industry profits leaped 70 per cent over the previous year, provoking a tremendous public outcry and numerous congressional investigations. Yet Congress took no serious action to prevent this from happening again once the furor faded. This year the percentage rises in profit have been up to three times as high. If the government cannot establish an "all-American" oil company now, it will lose the opportunity forever--the chance to join the rest of the Western, capitalist, industrialized world in fielding a state-owned competitor.

Great Britain bucked the trend along with the U.S., until it made the major North Sea discoveries. England's minister for energy noted in 1975. "No other government outside the United States has thought it wise to be completely dependent on the oil companies." But the U.S. would not have to explain a decision to participate in the oil industry only in terms of joining its capitalist comrades. It could cite home-grown precedents, too. The best is probably the Tennessee Valley Authority. It was a model of the yardstick competitor not only in price but in services and social concern, reclaiming land and replanting forests.

Senators Adlai Stevenson III (D-I11.) and Howard Metzenbaum (D-Ohio) are sponsoring bills that would establish some form of federal oil corporation, and California assemblyman Tom Bates is advocating an initiative to do the same thing on a state level. These campaigns face stiff opposition funded by the bloated budgets of the oil bureaucracies. They can only win success by convincing the public that the free enterprise system, our national security and the American way of life hang in the balance.

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