Fiscal Policy and the Energy Crisis
Staff Study of the Oversight and Efficiency of Executive Agencies with respect to the Petroleum Industry, Especially as It Relates to Recent Fuel Shortages on Government Operations
It now looks as though the world, or part of it, may achieve an energy plan, or part of one. With the oil price increases announced over Christmas by Middle Eastern producing countries, the “oil weapon” seems more a matter of money, less of embargoes. Crude oil, according to the Shah of Iran, will cost at least twice as much in 1974 as in 1973, and will be as expensive as other sources of energy, “the extraction of shale, the extraction of gas, the liquefaction of coal.”
The expectation of such inflation, not surprisingly, sharpens international desire for energy planning. There are already many variations of planning proposed, to a greater or lesser degree nationalistic or aggressive or farsighted; they include President Nixon’s all-American Project Independence, Japan’s “saving spirit” of short-term energy conservation, the French Prime Minister’s hopes for a Europe united in the “best possible future” of indigenous nuclear power, and Henry Kissinger’s “energy action group” of rich countries, the “economic equivalent of the Sputnik challenge of 1957.”
It will seem perverse to find any cause for optimism in learning the virtues of thrift from the Shah of Iran, or of “trust and friendship” from Henry Kissinger. Yet the present energy situation, and even the “crisis” rhetoric that attends it, should suggest certain hopes. Energy plans, of a nonmilitary sort, can emphasize international cooperation, or alternative energy development, or conservation. Of these objectives, conservation is the least favored by politicians; it is a piety for short-term policy and the ends of speeches. But it is also the objective most likely to be realized. The difficulties of solving the energy crisis by international cooperation or by finding alternative energy sources are so great, as the last few weeks have revealed, that changes in the use of energy have become an unanticipated and unwilled inevitability.
Cooperation. The recent oil strategies of rich industrialized countries strip the masks of internationalism or long-term rationality from economic policy. Henry Kissinger’s invocation of Sputnik sharpens a global tone of chauvinism and competition among the sellers and buyers of fuel. The European Common Market fractures on the issue of who should spare oil for Holland, who should buy Dutch natural gas, and who may share Britain’s North Sea oil. Holland is assured oil supplies not by its political allies but by international oil companies diverting tanker cargoes at sea. Mr. Denis Healey notes on behalf of the British Labour Party that “a British Prime Minister…has now threatened to wreck the Common Market unless he is able to keep full control of Britain’s energy supplies,” and “that…we welcome.”
Henry Kissinger’s plan for cooperation expressed the politics of spectacle, calling for “emotional and intellectual excitement” and urging the “drama of the great democracies” in Atlantic partnership. No small democracies were mentioned, or India, or Mali, where relief planes were grounded for lack of fuel as long ago as last summer. The Shah of Iran has described the effect …