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The US in Peril?

Phillips’s three major threats to the nation are well chosen, and he presents much information about them; but he could usefully have considered other perils to the US as well. The rising cost of health care, for example, is as grave a concern as the three issues on which he concentrates. Unless that system is radically reformed the US will face a future in which growing numbers of people will not receive adequate treatment. The cost of education is on a similar trajectory, as the chances of getting even a minimal education in the poorer neighborhoods become smaller. Similarly urgent are the failures of the economy. Despite rapid increases in productivity, which is historically the source of a rising standard of living, family incomes are not growing. In fact, after the five recent years of economic expansion, median family income is roughly what it was in 1999, even though wages at last rose early this year.

In foreign affairs, one could argue that oil dependency and born-again religion have much influence over this administration’s unfortunate policies. But they cannot alone account for its advocacy of preemptive war and its concerted efforts to update, improve, and build new weapons, including nuclear weapons, for conventional warfare. Bush’s assertion of presidential authority to ignore Congress and authorize wiretapping, torture, and illegal detentions threatens the principles on which America’s republican democracy is based. Phillips does not give these threats the attention they deserve.

Still, the damage being done by the administration’s irresponsible energy policies, more evident by the day, is an appropriate place to begin a book on American ills. Despite its having reduced the use of oil over the past thirty years as a percentage of the nation’s income, America is still by far the world’s largest user of oil, consuming 25 percent of the world’s daily production. Most of this is for transportation. Of the 520 million cars in the world, 200 million are driven in America, while the US makes up only 5 percent of the world’s population. It also has only 3 percent of the world’s petroleum reserves, meaning growing imports are a certainty. Domestic production has been falling for decades.

Drawing on previous history, Phillips argues that the price of oil, now more than $70 a barrel, could go higher than $100 a barrel as worldwide reserves begin to decline. If his predictions come true, this could drive fuel and gasoline prices to levels that could seriously slow down the American economy. At more than $3.00 a gallon today, gasoline prices may soon start restraining economic growth. But long-term forecasting of oil prices has usually been unreliable and overly pessimistic. Of greater concern than dwindling reserves is the increasing demand for energy by newly expanding economies, notably China and India. Prices are now more than double what they were two years ago, and are likely to stay relatively high as long as the world economy grows. In addition, access to oil production is increasingly threatened by both political and natural events.

The biggest exporters of oil to the US are Canada and Mexico. But the fourth largest, Nigeria, may be on the brink of a civil war that could threaten production. Venezuela, another major oil exporter, is increasingly antagonistic to the US and American oil companies. Bolivia recently announced plans to nationalize foreign-owned natural gas companies. The US imports about 17 percent of its oil from the Middle East, a proportion that will rise. When Iran first threatened to cut off exports to the US during the current dispute over its nuclear program, oil prices jumped and have only risen further as tensions increase. Russia, a major producer, has been using its oil and natural gas reserves as a political weapon, threatening to shut down flows of oil and natural gas to the rest of Europe if it doesn’t get its way. Gasoline prices also rose to $3.00 a gallon, if only temporarily, after Hurricane Katrina devastated refining facilities in the Gulf last summer.

A serious energy policy providing for security, diversity of sources, and, most important, conservation is necessary. But as Phillips shows in detail, such a policy is stymied by a US administration that is highly sympathetic to the powerful oil companies that would rather promote further exploration than reduce oil use. It is also an administration that does not want to ask Americans to make sacrifices. This was a political lesson learned from the Reagan administration, which successfully portrayed President Carter as a weak and confused pessimist because he called attention to the limits of natural resources. “The glory of the twentieth century is now the burden,” writes Phillips somewhat rhetorically.

Oil has soaked deeply—in all likelihood indelibly—into the politics and power structure of the United States, partly because over two bountiful centuries it has also seeped, spouted, and oozed up from so many sections of so many states. More than a fuel, oil became a heritage and also the basis of a lifestyle.

Oil was first produced in volume in Ohio, Pennsylvania, and West Virginia, and later Louisiana, Texas, Oklahoma, and California. Oil companies and auto companies were among America’s largest throughout much of the twentieth century, and Rockefellers, Fords, and Dodges were among the nation’s richest people. As late as 1982, as Phillips observes, the fortunes of half of the top thirty of those on the Forbesmagazine list of the 400 richest Americans originated in petroleum. It is also to be expected that a huge nation with tens of millions of drivers will demand low gas prices. As Phillips shows, the high excise taxes of the kind levied in Europe to conserve oil have always been resisted in America, particularly by the auto industry and its powerful allies.

The willingness of much of the public to use less oil in the 1970s under President Carter suggests, however, that solutions to difficult problems are not beyond the nation’s capacity. When Arab oil countries, along with some others, formed their cartel in the early 1970s, oil prices rose fourfold by 1974 and doubled again at the end of the decade. But higher prices reduced demand in the late 1970s and early 1980s and promoted the use of more efficient cars and other products, as did new government regulations requiring better performance. The average car was built to drive twenty-five miles per gallon by 1985, compared to fifteen miles per gallon ten years earlier. Home heating units and a great many appliances became much more efficient in conserving energy. The Reagan administration, however, turned away from regulation and conservation, and promoted domestic exploration, although Phillips is not clear why we cannot adopt policies similar to those of the Seventies again.

In the years that followed—under both George Bush Senior and Bill Clinton—a great opportunity to maintain conservation efforts was tragically missed. The crude oil price fell sharply in the 1990s to one third of its high, and American oil consumption soared again. By 1999, almost half of all new cars were gas-guzzling minivans, SUVs, and light trucks. Between 1990 and 2002 oil interests gave $159 million in campaign contributions to American politicians of both parties, but particularly to Republicans. The transportation industries gave $256 million. They made huge contributions to the Bush presidential campaign of 2004. For many years, as Phillips writes, these industries avoided regulations intended to produce both cleaner air and higher mileage for cars. The Bush administration maintained special tax treatment benefiting the energy industry and discouraged public investment in alternative fuels. SUVs in particular enjoyed a government-mandated privilege: because they were classified as light trucks, they were not subject to the gas mileage requirements for passenger cars.

By 2004, Phillips writes, “an oil, automobile, and national-security coalition had taken the driver’s seat.” Of all the major oil- and gas-producing states, only California voted for John Kerry. According to one survey cited by Phillips, Americans who drove the most, especially those who drove large SUVs and full-sized pickup trucks, supported Bush by a wide margin.

Phillips also argues that oil dependency had an important part in the American decision to go to war. Access to Iraqi oil, he believes, has long been on the minds of the Bushes, father and son. Both made personal fortunes thanks to the family’s oil interests, and Vice President Cheney, the former CEO of Halliburton, also got rich on oil. Before the first Gulf War, George H.W. Bush said, we “would all suffer if control of the world’s oil reserves fell into the hands of Saddam Hussein.” According to one source cited by Phillips, Cheney closely studied maps of Iraqi oil reserves before the 2003 Iraq invasion to determine how much could be sold on the market to depress prices.

No doubt, the Iraqi oil fields were a tempting target of the US. Iraqi oil is plentiful and under Saddam Hussein was cheap to produce. Falling prices would have been a help to the US economy, while a friendly source of oil reserves would have made the US less beholden to Saudi Arabia, from which, as many in the government observed, most of the September 11 terrorists originally came. The oil companies who stood to benefit were strong political supporters of both the President and Vice President. David Frum, Bush’s former speechwriter, wrote in his book The Right Man that the war was designed to bring new stability “to the most vicious and violent quadrant of the Earth—and new prosperity to us all, by securing the world’s largest pool of oil.”

Frum was referring here particularly to Saudi Arabia and other Gulf nations that seemed in danger of revolution. But Phillips does not make a convincing case that the central purpose of the war was to gain access to Iraqi oil. It seems more likely that the control of Iraqi wells was seen as an added benefit of the war. But the reader does not have to accept all of Phillips’s claims to be disturbed by the obvious threats to national security posed by dependency on oil. Fear of Soviet influence in the Mideast oil region has long encouraged the US to cultivate dictatorial regimes there. If the Bush administration was counting on cheap oil from Iraq to reduce prices and American energy dependency, this was yet another example of its gross incompetence. Iraqi oil production is still well below pre-war levels.

But Phillips sees no way out. America’s aging system for supplying energy, he writes, which is “guarded by a globally aggressive, entrenched-interest political coalition, is a harbinger of costly confrontations and military embroilment likely to lead to national decline.” Yet according to recent public opinion surveys, a large majority of Americans are now demanding new energy policies as prices rise and the damage from carbon emissions is more widely acknowledged. The Apollo Alliance, a Washington-based group involving many businesses, labor unions, and environmentalists, for example, is proposing a series of investments in alternative energy sources, more efficiently heated buildings, better transportation planning in cities and suburbs, and new regulations on energy use.3 If these measures could be carried out, the nation would be far less dependent on energy, and the economy would produce more domestic jobs as well. Such a strategy would require large-scale funding and national planning, and a willingness by politicians to take on the powerful interests. But it is not inconceivable that a new Congress could take steps in this direction and even ask Americans to accept new taxes to pay for it. Phillips does not discuss such a possibility.

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    For more information, see www.apolloalliance.org.

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