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What Is the ‘Energy Crisis’?

I

President Nixon’s energy policy, expounded in April and amended in each subsequent turn of economic policy, down to the imposition in June of Freeze Two, has failed so far to halt even the rhetoric of the “energy crisis.” The President’s energy message was received with judicious commendation by large and small US oil corporations. Nixon proposed the liberalization of oil imports, increased support for domestic production and refining, relaxation of controls on natural gas prices, reduced concern for environmental protection, and a new system of tax credits for oil and gas exploration. These suggestions inflated the already high price of oil stocks. The Wall Street Journal quoted the opinion of an oil analyst that “the [unpredictedly but ambiguously munificent] tax credit was the only surprise in the energy message.”

Nixon’s statement stayed close to the hopes and exhortations, even to the language, of the petroleum industry’s corporate advertising. His major projects followed most of the recommendations of the American Petroleum Institute, the National Petroleum Council, the American Gas Association, and the other institutes and associations that had described America’s energy crisis. The presidential message achieved a tone that mixed the calm and shrill, major and minor, multinational and nationalistic, Eastern and Texan voices of different energy interests: it was less sophisticated, less farsighted perhaps, than the reflections of the Mobil corporation, as advertised on the “Op-Ed” page of the New York Times, but less strident than the pronouncements of, say, the “New England Oil Men’s Association.”

Such a mixture of political-corporate business as usual was unexpected only because of the expense and momentous anticipation that attended Nixon’s energy “initiative.” Early descriptions of the forthcoming energy plan had promised the most global and photogenic policies. Soon after the 1972 election, Secretary of Commerce Peterson proclaimed that “the energy strategies and programs the President presents next year will be fully equal to his initiatives to the Soviet Union and the People’s Republic of China.” The subsequent message was prepared with the help of some sixty government reports, a cabinet super-committee, an energy overlord, a White House energy coordinator trained by the US Navy, and, sporadically, Dr. Kissinger’s secretariat.

The Wall Street Journal, in January, noted that Kissinger’s staff had organized “paperwork” on the strategic aspects of energy policy, and planned to “float it around the State Department, Pentagon, CIA and other concerned agencies.” Energy policy was presented as a major endeavor for the period “after Vietnam.” As one “Kissinger staffer” revealed, “Suddenly we’ve realized we should worry about energy problems. We’ve been pondering which matters to stress over the next |four years, and this is certainly one.”

The rhetoric of political anticipation suggested questions which a US energy initiative could not hope to answer. The message was, as one government official put it, a “disappointment.” Policies of Kissingerian balance were never very appropriate to the complicated and essentially economic problems of supplying oil, coal, and gas. The eventual energy message in fact minimized issues of national defense. Commentators noted that it failed to mention the word “Arab”; Kissinger himself, with some instinct for bureaucratic self-preservation, seems to have extricated his group from prominent involvement in such unpromising and disputed problems.

Most of the conflict over energy policy had to do with domestic economic issues. Government energy strategy, from Nixon’s message down to recent Administration attempts to regulate persisting energy shortages, was divided over the merits of applauding “free” competition and intervening to control it—the same issue that has fractured economic policy, and particularly policy to control inflation. Delays in the presentation of the energy message were caused, reportedly, by such questions as whether oil imports should be allocated to companies by fee or, in a purer spirit of free enterprise, by auction. President Nixon’s chief energy counselor was John Ehrlichman, who presumably found particularly keen distractions in early 1973. Ehrlichman spared the time, however, to reveal in an interview published in the May, 1973, issue of Nation’s Business that his “role changed from the first to the second Nixon administration to the extent that he…now is able to give more time to going into major issues, like the energy problem, in depth.”

Other disputes concerned different business lobbyists, such as the producers, refiners, and marketers of oil, and industries such as the chemical business which are large energy users. Officials disagreed over policies for moderating the demand for energy, as distinct from expanding its supply: the presidential message eventually dismissed energy conservation with vague encouragement, summarized by Treasury Secretary Shultz in his explanation that in conservation policy “what we are trying to give is a sense of ongoing effort to address this problem.”

The tone of these arguments also suggested a general retreat from the substance of environmental concern. This retreat, demanded by business, was signaled in Nixon’s deprecation, earlier this year, of the “doomsday mentality,” and in the remark of an Atomic Energy Commission official that the environmental movement is “seeing an analogue to the over-taking of the civil rights movement by the extremists several years ago.” It was apparent also in fiscally conservative attacks on urban reorganization plans and on the northeast railroads, and in the continuing re-examination, sometimes reasonable and sometimes craven, of air quality and auto emission standards.

Such complexities made it almost impossible for government strategists to disentangle, for example, the time periods of the “energy crisis.” Yet a confusion of time periods goes to the heart of energy difficulties. US energy “crises,” as described in hundreds of corporate advertisements and official pronouncements, include: immediate problems of distributing gasoline, heating oil, and other fuels, on a month to month basis; questions of energy production and oil refinery capacity for the next three years; problems of world oil supplies for the next fifteen years, and of finding “alternative” fuels as a substitute for oil; and finally a long-range “crisis” of industrialization and natural resources. These problems are distinct, although the resolution of each has to do with prices and corporate decisions about prices.

Each problem raises different, grave problems of political evaluation. An immediate example of these problems is shown in the recent Administration proposal, now postponed for apparently political reasons, to reduce energy demand by raising gasoline taxes. Such a strategy, unless combined with selective tax increases, would discriminate against the poor, who might be forced to reduce recreational and vacation driving, since automobile commuting is compulsory for most US jobs. The development of alternative fuels, to take a longer term example, will raise even more difficult questions. Public policy should, in this case, weigh the power of US industries, such as the chemical or automobile or trucking businesses, which are dependent historically on cheap oil; the benefits to consumers of lavish oil use; and the cost of developing new coal or oil shale, particularly to people living in the Western states where such fuels would be mined. Yet these difficult evaluations have seemed, to the high officials of the Nixon Administration, as inconceivable as subtracting the moon from the stars, or oil shale from automotive mobility.

II

The immediate energy crisis of gasoline shortages, halted tractors, and emptied Colorado schools is now a subject for angry incredulity. Even President Nixon has suggested that present troubles do not constitute a “genuine” energy crisis. Armies of local, state, and federal officials address the question of whether energy shortages are “real”—finding no answers, while shortages, which are real in a most concrete sense, persist.

The question Is there an Energy Crisis? may not be answered satisfactorily, because it is, in a sense, the wrong question. What can be shown is that the institutions and corporations responsible for distributing energy have behaved in a way which is incompetent, or disingenuous, and usually both. Questions about the reality of the energy crisis confront issues of corporate and competitive privacy. Independent gasoline marketers have been the main victims of present gas shortages, often unable to obtain supplies after large producers have supplied their own gas stations. Yet even the independents cannot prove deception in the general allocation of supplies.

There are few relationships more protected than the association, in petroleum distribution, among companies, their local depositories, their routing managers, their tanker drivers—and few decisions more obscure, even to most corporate employees, than the evaluation, in petroleum investment planning, of future demand and prices, of construction technology, and of the profitability of refinery building. Yet the cumulative effect of corporate behavior can now be seen much more clearly in the history of present energy disruptions.

Corporate crisis advertising is constantly critical of “environmentalist” or “doomsday” constraints, yet it has played quite openly on public anxieties about long-term dangers to the environment. Energy publicity relies on such images as electric lights that fail, frame by frame, or of the US “dangerously dependent” on barbaric foreign sellers of natural resources: these images, as will be seen, have very little to do with the business practices that cause energy shortages.1

Immediate fuel shortages are caused, evidently, by failures of distribution. When Denver ran out of heating oil, there was oil in Pennsylvania, and when Long Island filling stations rationed gasoline, gas flowed freely in New Jersey. Some initial presumption of corporate disingenuousness is indicated by the financial scale of operations: the American Petroleum Institute and the American Gas Association alone spent $12 million on three recent energy campaigns, and individual corporate advertisers dispensed comparable sums—enough money, at least, to airlift heating oil to every school in Denver. Meanwhile proficiency in distribution has been among the proudest boasts of US oil companies, since an apologist for the Standard Oil Trust proclaimed in 1900 that “petroleum today is the light of the world. It is carried wherever a wheel can roll or a camel’s hoof be planted….”2

A study of energy use in Scientific American comments that the shortage of liquid fuels now presents “no real technological problem…along the distribution chain,” and that “it is easier than keeping grocery shelves stocked.”3 Even supplying a satisfactory “mix” of petroleum products—heating oil in the winter, or industrial fuels, or gasoline in the summer “driving season”—is comparable to the challenge grocery stores face when they supply lemonade in July and turkeys in the fall. Further presumptive evidence for disingenuousness is shown, of course, in the by now notorious pattern of energy shortages, where rationed fuel distribution discriminates against and occasionally bankrupts independent and cut-price marketers, where along a single highway favored stations find supplies and independents lock their pumps.4

Public concern about the status of fuel distribution problems has forced the energy corporations to retreat to a more sophisticated rhetorical position. Corporate advertisements of the last few weeks have emphasized the “three year” problem of insufficient refinery capacity, and the technical difficulties of importing foreign oil. Yet these problems, as obscure and as private as imperfections in distribution, show the same pattern of deviousness and incompetence. Even the limitations of existing refinery capacity are surprisingly flexible. For several weeks during the recent “gas crisis,” US refineries produced less gasoline than during gas booms. A June advertisement by the Amoco corporation displays this ambiguity, in a crisis “progress report” qualified to the point of meaninglessness: “Primarily, the situation is this: demand has outstripped our country’s crude oil supply. (Even though Amoco refineries are running well ahead of last year. And at practical maximum with available crude.)”5

  1. 1

    Energy corporations are not of course alone responsible for publicizing the idea of an energy crisis, although as the agents directly responsible for fuel shortages, their intervention has particular force. A noncorporate but congenial view is given in a book, The Energy Crisis, by two scientists, Lawrence E. Rocks and Richard Runyon (Crown, 1972). These authors are influenced by the Meadows analysis in The Limits to Growth, and they believe that “the most profound issue we face today is an impending power shortage,” that “an energy gap is opening up in America sufficiently wide to cause a total industrial collapse in one decade.”

    Their scenario for the “accelerating power crisis” surpasses even the methodology of Limits to Growth in moving from “would” to “will”: “What would the United States be like if we suffered a massive power default, with no viable alternative energy sources?…At the beginning, the cost of gasoline and oil products will increase…there will be restrictions placed upon the use of luxuries…. Our entire network of interrelated institutions will feel the shock waves [of energy rationing]. Forgotten will be our lofty ideas of justice and democracy….” This timetable, as much as that of Mobil or the National Petroleum Council, mixes different problems in a single gloomy fate—accepting also the equivalence of progress and energy consumption, and the necessity of technical rather than political solutions.

  2. 2

    Quoted by Ida Tarbell in The History of the Standard Oil Company (reprinted by Norton, 1969). The company apologist continues: “The caravans in the desert of Sahara go laden with Pratt’s Astral, and elephants in India carry cases of ‘Standard-White,’ while ships are constantly loading at our wharves for Japan, Java and the most distant isles of the sea.”

  3. 3

    Scientific American, “The Economic Geography of Energy,” September, 1971.

  4. 4

    Gasoline allocation is now to be supervised publicly. When Nixon’s voluntary allocation scheme was announced in May, oil companies reacted with their customary unanimity, Exxon expressing “serious concern about the practicality of the plan” and Mobil “seriously concerned about [the plan’s] legal implications.” But Mobil subsequently retracted its legal concern; a company spokesman, groping after the Zieglerian locution “to inoperate,” announced that the previous statement had been “withdrawn.”

  5. 5

    Italics added: has demand outstripped supply or has it not, and is supply limited by refinery capacity or by the availability of crude oil? The main technical difficulty, in the very short term, of increasing crude oil imports is that some US refineries cannot process high sulphur foreign crude without expensive modifications. The main difficulty of increasing gasoline imports is that while many US and foreign-owned refineries in Europe have considerable excess capacity, they are organized to produce relatively little gasoline compared to heating and industrial fuels, and gasoline which suits small European rather than large American cars. These difficulties are costly to overcome—but it is a cause for grave alarm if they are beyond the competence of the corporations which for seventy-five years have lit the lights of Java and Japan.

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