THE BLOG

As Oil Touches All-Time Highs, Our Deparment of Energy Takes Us For Fools

Apr 09, 2008 | Updated May 25, 2011

Our oil whiz, Secretary Bodman of the Department of Energy, perhaps a distant cousin of "Heckuva Job Brownie" of Katrina fame, wrote a letter to the New York Times on March 30 rebutting points in an editorial, "Pain at the Pump and Beyond" from March 25, proceeding, I would imagine, on the assumption that everyone is as much out of the loop on oil issues as he is.

The New York Times editorial was a typical Times recitation of oil patch blather pinning high oil prices on "Soaring demand in fast growing developing countries like India and China and turmoil in the financial markets", and investors turning to commodities in lieu of stocks and the dollar. Never a mention of the machinations of OPEC, the vertical integration of the oil companies, nor the possibility of manipulated futures markets by hedge funds ("There is an orgy of speculation in the futures market. This is a 24-hour casino with unbelievable speculation" -- Sen. Byron Dorgan of the Senate's Energy and Natural Resource Committee), sovereign wealth funds and others who have a keen interest in high oil prices (see "Oil At $111 a Barrel. We Are Being "Sovereignly Screwed", March 17).

Then, with brilliant insight the Times editorial goes on stating that "not everyone is unhappy with oil at $100-plus a barrel", citing authoritarian governments in Iran, Venezuela, Sudan and Russia. Absent from their list of honor is that great democratic constitutional monarchy, Saudi Arabia and OPEC's de facto leader. Yet even more outrageously, in that it is closer to home, is the editorial comment that "the Bush administration can't be entirely blamed for the pain at the gas pump", a sort of left-handed absolution of an administration that couldn't be happier with the booming price of oil (please see "Bush's Hypocrisy, OPEC's Arrogance, The Oil Mess We Are Living", March 7).

Then Energy Secretary Bodman, as is his wont, couldn't leave well enough alone, as was the case back in October with oil prices still in the $80 barrel range, he volunteered either out of insouciance or malign intent that the U.S. economy was "remarkably resilient" in the face of surging oil prices, thereby giving free rein to a further surge to the current $111/bbl. Bodman responded to the Times with a vaguely chastising brief, advising them and the rest of us that he "strongly disagreed" with the Times' contention that the Bush energy strategy "is focused on one thing: getting more oil". Of course Bodman is quite right. The administration's primary focus is not getting at more oil. Far more importantly, it is laying the groundwork for and successfully rationalizing to a gullible public the ever skyrocketing price of oil, (please see "Cheney Greets King Abdullah in SaudiLand With High Fives As Oil Sails Past $100 Per Barrel", March 27)

As if to prove the point, the Energy Department this Friday past, announced they would continue to purchase oil for the Strategic Petroleum Reserve over the objections of such as Senator Dorgan: "Not only are taxpayers being fleeced by paying that much for oil, but the effect of taking valuable oil like sweet crude oil off the market has a disproportionate effect on oil prices". Far be it for Secretary Bodman and his Energy Department to understand the meaning of the signal that their ongoing purchases of oil at escalating prices sends to the markets and its important impact on the psychology of the marketplace.

One needs go back to Bodman's letter, because it gives a clearer and frightening picture of this administration and its Department of Energy's priorities and the inexcusable loss of near eight years of precious, precious time in dealing with what is perhaps the nation's most inexorable and threatening danger to its future.

Please sit down. Bodman nearly bursts with pride advising us and the Times that "since the start of this administration the federal government has spent more than $12 billion to research, develop, and promote alternative energy sources." $12 billion since 2001! That's a lot of money. Why it's even more than one third of the $29 billion Bear Stearns bailout last month. Of course there the administration had real money and real supporters on the line.

But it doesn't stop there. Mr. Bodman and his Department of Energy, certainly at the behest of their (our?) president and vice president, have sat idly on their hands as the price of oil escalated by some $85 a barrel (from around $25/bbl to over$110/bbl) during the last seven-plus years. This nation consumes about 21 million barrels of oil a day and now the additional cascade of American wealth flowing into the pockets of oil interests both here and abroad is approximately $1.78 billion a day ($85/bbl x 21 million barrels), or $564 billion a year. Not to speak of the trillions that have already been transferred to oil patch interests over the last seven years due to escalating oil prices given the benign tolerance of the hacks at the Department of Energy and our administration. Money that could have been used to expand our fleet of hybrid cars, pay for a major conversion to electric cars (please see "An Essential and Viable Energy Fix and the Renaissance of Detroit", April 4), developing hydrogen-powered vehicles, expand wind power and clean coal technology, seriously revisit nuclear power and much more. Where is the outrage, where is the push back when OPEC President Chakib Khelil pronounces as he did on Tuesday, with oil prices at $109 a barrel, that there was no need for OPEC to pump more oil?

Well don't despair. As referenced above, our administration and its factotums at the Department of Energy have over the years set aside $12 billion to deal with this issue of existential importance to the nation's future. Given their largesse we are asked not to look too closely at the extra trillions going to the oil industry. After all, this administration knows who their friends are.