Well, there he goes again — ruling by decree. President Clinton is
going to tap the Strategic Petroleum Reserve. You say he can’t do that?
You say the president’s authority to tap the SPR expired on March 31,
2000? So what? Ever since Congress failed to remove him from office,
this rogue has been ruling by decree.
Even if the president’s authority to tap the SPR hadn’t expired, he
couldn’t — legally — use it to drive down the price of heating oil in
the Northeast. The SPR can only be tapped in the event — or likelihood
– of a “severe supply interruption.” No one has suggested that there
is going to be a severe supply interruption any time soon.
But maybe the Clintons and Al Gore know something we don’t know.
President Bush did tap the SPR, during the Gulf War, which did, indeed,
cause a crude oil supply interruption. Do the Clintons intend to go to
war next month in the Mid-East?
While you’re worrying about that, let’s return to the Energy Policy
and Conservation Act, which contained the authority — which just
expired — for the president to tap the Strategic Petroleum Reserve, and
the role of former President Jimmy Carter.
You see, unlike most Americans, President Carter didn’t believe in
private property. In particular, Jimmy didn’t believe in mineral
rights. Even if your mother thought she owned the oil under the family
farm, and had the right to sell it, she didn’t — according to Jimmy.
It wasn’t hers to sell. All the minerals in all the world, including
those under all the oceans, ought to belong, collectively, to all
mankind, thought Jimmy.
(Note that Jimmy’s wacko ideas — which may sound a lot like
Communism to you — are not as wacko as Gore’s. The Prophet Gore doesn’t
believe anything on the planet “belongs” to any of us parasites. Of
course, he hopes you parasites won’t find out what he believes until
after the election.)
OPEC had deliberately restricted crude oil production in the 1970s
and — as we all learned in school — when supplies are restricted,
prices go up. That, of course, is exactly what OPEC expects to happen
whenever they restrict production. That’s why they do it. To drive up
Enter Jimmy the Moralist. Upon taking office in 1977, President
Carter decreed it to be immoral — his word, “immoral” — that your
mother would in any way benefit from the higher OPEC prices for crude
oil. No OPEC windfall for her!
So, Carter got the Democratically controlled Congress to make it a
felony to sell “old oil” (all oil in domestic proven reserves at the
time Carter became president) as “new oil” (oil that was not discovered
until after Carter became president).
Suppose Carter allowed, say, $10 a barrel for new oil, but only $2 a
barrel to your momma for her old oil. Carter then required someone –
usually the refiner — to pay the federal government the $8 a barrel
difference that under President Ford would have gone to your momma.
Jimmy called that thievery the Windfall Profits Tax. (Actually, it was
a lot more complicated than that, but you don’t want to open the Carter
“entitlements” can of worms.)
So, what did the individuals and companies who owned most of that old
oil do? Well, if they could afford to, they quit producing it. They
just left it in the ground. In those days, even Carter thought the
world was running out of oil and the longer those proven reserves of oil
stayed in the ground, the more they would be worth when they were
eventually produced. Old oil, left in the ground, would be worth a lot
more after Jimmy Carter went away. So everyone began to hope and pray
that someone like Ronald Reagan would come along, someday, and repeal
the Windfall Profits Tax.
What to do? If Carter had thought he could have gotten away with it,
he might just have confiscated all that immoral private property. But
even a Democrat controlled Congress — many of whom had mommas sitting
on old oil — wouldn’t allow that.
Now, President Ford had already begun to establish a Strategic
Petroleum Reserve, before Carter arrived on the scene, to tide us over
in the event there was a serious disruption in our supply of foreign
crude oil. The federal government would: 1) buy crude oil on the open
market, and then 2) pump it into the SPR and, when there was a severe
supply disruption, 3) pump it back out again. Of course, buying crude
oil on the open market would push up the world price. But as envisioned
by Ford, that would also make more U.S. domestic production economical,
and under Ford your momma could produce her oil and sell to the SPR.
Ford would put it back in the ground, all right, but it could be much
more easily and quickly produced in case such things as the Gulf War
came along. Ford would have his reserve and your momma would have money
in the bank.
But Carter — and now Clinton — looked at the SPR somewhat
differently. They looked at the SPR primarily as a way to put a lid on
crude oil prices. Hundreds of millions of barrels of oil, bought by the
U.S. taxpayer, was now public property. Whenever OPEC restricted output,
raising the price of crude, before the price ever got high enough for
momma to begin producing her oil, all the politicians in the Northeast
would scream bloody murder — just as they did last fall and as they are
doing right now — demanding that the president release 30 million
barrels or so of the SPR crude.
Actually, there are only about 600 million barrels of crude oil in
the SPR that cost us taxpayers, on average, about $27 a barrel to
acquire, most of it bought from PEMEX. Now, that’s the average cost and
is more than the OPEC price has been until a few months ago. If Clinton
had the authority to do what he is doing, he is supposed to ask for bids
for the million barrels per day that he is releasing. And if there was
a real supply shortage, that SPR oil would ordinarily be sold at world
market prices. That is, the SPR is all about supply of crude,
availability of crude, not price of crude. If there really was a
shortage of crude, the SPR crude should fetch market prices.
At present we consume about 19 million barrels a day, and more than
half of that — 10 million barrels — is imported. There is no shortage
of crude here in the U.S. Refineries are running at better than 92
percent capacity. If Clinton sells (or swaps) crude from the SPR to
U.S. refineries, then those refineries will just not buy a million
barrels of OPEC crude that they otherwise would have bought. U.S.
refineries will operate just as before, and, with cheaper Clinton crude,
the price of heating oil in the Northeast may be reduced. But it will
not cause OPEC to lower prices. Because of Clinton, OPEC will not have
sold a million barrels a day of crude that it would have otherwise. If
anything, OPEC will further restrict production, further driving up
prices for the rest of the world. So what President Clinton is doing is
not only illegal, but it is perverse. All to buy a few votes in the
Northeast at the expense — literally — of the rest of us.
In announcing his latest outrageous unconstitutional and
congressionally unauthorized action, President Clinton said, “It’s the
right thing to do!”
If you’re over 50, you already don’t believe a word the man says,
anyway. But if you’re under 50, and you’re inclined once more to
believe him, and you doubt that all this Jimmy Carter morality play ever
happened, why don’t you go ask yo’ momma.