Contradictory and self-serving policies led the Clinton-Gore
administration to cause the current skyrocketing oil prices, say Middle
East and petroleum industry analysts.
By interfering in the oil markets in 1998 when prices were perceived
by some to be too low, the administration put into motion the
huge current run-up of prices, according to Matthew Simmons, who has
tracked oil prices for 30 years as the head of a Houston-based
investment bank, Simmons & Co. International.
As if that isn’t enough, Simmons and others also believe the current
Middle East tensions could tempt Saddam Hussein — who has become a
major source of oil for the U.S. — to make a malevolent move, and soon.
At an Oct. 18 conference in New York sponsored by the Council on
Foreign Relations, the Energy Department’s Director of Policy, Melanie
Kenderdine, described efforts she and Energy Secretary Bill Richardson
made in late 1998 to get assistance from the president’s National
Economic Council when another crisis gripped the oil industry — not of
prices too high, but too low.
At that time, world oil prices had plunged to historic lows of less
than $10 per barrel, sending the world oil and gas industry into
disarray. Bankruptcies loomed on the horizon.
The crisis was sparked by the collapse of the Asian economies at a
time when OPEC had ramped up production to meet anticipated new demand.
It was aggravated by the sudden inflow into the market of nearly 2
million barrels per day of Iraqi oil, released under the United Nations’
oil-for-food program, which was strongly supported by the
By late 1998, said Kenderdine, Richardson and other top Energy
officials were seeking White House support for specific measures to help
the U.S. oil and gas industry.
Simmons met with Kenderdine in December 1998 as she was putting
together a white paper laying out possible strategies.
“Richardson and Melanie were fighting a war,” Simmons recalls. “But
it was a war against the rest of the administration. [Vice President]
Gore and [Interior Secretary Bruce] Babbitt wanted the prices to stay
down, as a spur to the economy, while Richardson wanted higher prices to
help the oil and gas industry.”
Richardson’s arguments, says Simmons, fell on deaf ears at first,
“because Gore hates the oil and gas industry.”
Then in February 1999, Richardson met with Saudi oil minister Ali
Naimi in Riyadh, asking the Saudis to cut production in order to boost
prices. Why? As Kenderdine told the Council on Foreign Relations in
mid-October, part of Richardson’s message was to “describe to them how
bad things were with $10 oil,” says Simmons, who shared the podium with
But there was another part of the message, Saudi sources told
WorldNetDaily. Richardson argued that low oil prices would drive Russia
into default on its international debt, since Russia derived a hefty
share of its foreign currency earnings from oil. And that was an outcome
the U.S. administration wanted to avoid.
Russia was Al Gore’s department.
Since the early days of the Clinton administration, Gore had been put
in charge of U.S. relations with Russia, along with Deputy Secretary of
State Strobe Talbott, a former Time magazine correspondent.
Gore’s failure to prevent Russian sales of conventional weapons to
Iran was blasted across the front page of the New York Times last month.
Congress has demanded that the State Department turn over a secret
agreement, leaked to the Washington Times, that Gore signed with Russian
Premier Victor Chernomyrdin, in which he promised not to impose U.S.
sanctions on Russia for arms sales to Iran, even though they were
prohibited under a 1992 law that Gore co-authored with Sen. John McCain.
Gore and Talbott also failed to prevent Russian sales of advanced
technology and components for Iran’s latest ballistic missiles, the
800-mile-range Shahab-3, which was successfully test-launched in July
1998. Russian technicians have also been helping Iran design a
2,700-mile ICBM known as the Kosar,
based on the Soviet SS-5
The market reacts
Richardson sent one of his top deputies, Assistant Secretary David L. Goldwyn, on at least one additional swing through the Persian Gulf in early 1999, to convince OPEC producers once again to cut production and raise prices. As the year wore on, the markets began to react. By the end of the year, they had swung wildly in the opposite direction, with crude oil prices rocketing from $10 per barrel to $26 by yearend, and more than $30 per barrel by March.
“We never had an oil glut,” Simmons contends. “When prices were at $10 per barrel, we had a market that was relatively in balance and that would have sorted itself out.” Instead, OPEC cut production sharply at the prodding of the Clinton administration.
For Middle East analyst Paul Michael Wihbey, a former vice president of Canada’s Federal Liberal Party who now writes for the Institute for Advanced Strategic and Political Studies in Washington, D.C., the Clinton administration’s oil policy has shifted from support for low oil prices to just the opposite, since it is driven by contradictory goals.
“The Clinton White House has an energy policy that is driven by 1) the reduction of the American oil-producing sector, 2) the collaboration through OPEC to raise or reduce production levels and pricing according to political circumstances or personal goals, and 3) maintaining artificially high oil prices, for as long as possible, to sustain oil-dependent economies like Russia, Mexico and Indonesia, which permits the payoff of U.S. generated loans.”
‘War with the White House’
Ironically, White House’s rejection of pleas from Richardson to take preventive measures to ward off the energy crisis occurred alongside a growing U.S. dependence on Iraqi oil.
New estimates from the U.S. government’s Energy Information Administration, obtained by WorldNetDaily, show that Iraq has now become the United States’ sixth-largest source of imported oil.
But this new dependence could be a recipe for disaster should Iraq decide to stop exporting oil, U.S. government oil analysts say.
“Based on Iraq’s past history, the things they could do are quite scary. Unlike other countries in the region, Iraq does not have to be rational,” one EIA analyst told WorldNetDaily.
“This is something no one wants to think about,” another EIA analyst said.
“If Iraq decides to take its oil off the market, there is not enough excess capacity anywhere else in the world to pick up the slack. We’re going to hear from Saddam soon,” said Simmons in an interview.
U.S. companies imported an average of 606,000 barrels per day of Iraqi crude during the first eight months of the year, according to the latest statistics compiled by the EIA. The level of Iraqi imports were compared with daily averages for other nations over the same period: 1.46 million barrels per day from Saudi Arabia, 1.29 million barrels per day each from Canada and Mexico, 1.19 million from Venezuela and 1.1 million from Nigeria.
America’s appetite for Iraqi oil comes at a time when the Iraqi dictator is seeking to emerge from 10 years of isolation to reclaim the center of the world’s stage. In recent weeks, Saddam has threatened to cut off oil exports in “sympathy” with Palestinians fighting against Israel, and has offered to send troops to Jordan to be on the front lines with the Jewish state.
Even without a move by Saddam to take his oil off the market, oil prices are headed upwards, at least in the short run, some U.S. government oil analysts believe.
“We don’t characterize the current prices (of nearly $34 per barrel) as high,” a Middle East analyst at the Energy Information Administration told WND.
Simmons put it more bluntly. “We’re about to have a massive oil shock,” he said. “When the weather gets cold, we’re out of capacity.”
Wihbey believes higher oil prices have undoubtedly benefited countries such as Iraq and Iran by giving them the financial resources to develop new ballistic missile systems, nuclear weapons systems and to “fund military campaigns.”
A political oil forecast?
The official EIA energy forecast predicts oil prices will remain more or less steady over the next five months, then begin to drop starting in February 2001, reaching $25 to $26 per barrel of West Texas Intermediate by the end of next year, analysts told WorldNetDaily.
The EIA monthly short-term forecast was due to be released on Nov. 6, but has been delayed until Nov. 8 — the day after the U.S. presidential elections. An Energy Department spokesman said the delay had “nothing to do with politics.”
One thing the latest estimate shows, analysts said, was the futility of President Clinton’s order last month to release oil onto the market from the Strategic Petroleum Reserve in an effort to lower prices. Prices have remained steadily high, and are predicted to rise slightly in the coming months, despite the availability of 30 million barrels of oil from the SPR.
Clinton’s move was widely seen as a gesture aimed at shoring up the Gore campaign, as low-income homeowners in the Northeast corridor face spiraling fuel-oil prices as the weather gets cold.
Texas Gov. George W. Bush and other Republicans have criticized the administration for crippling the domestic oil and gas industry through burdensome environmental regulations. According to Sen. Larry Craig, R-Idaho, EPA regulators have blocked the development of clean coal, called for tearing down hydroelectric dams to protect salmon, and for the past 14 years have prevented any new refineries from being built in America.
introduced legislation in May that sets out a national energy policy based on expanding clean coal, hydropower, renewable fuels and nuclear energy as the means for reducing America’s dependence on foreign oil.
Kenneth R. Timmerman is a veteran investigative reporter who has published three books on the arms trade and intelligence issues. In his new book, “Selling Out America,” Timmerman tells the complete story of Bill Clinton’s relationship with communist China, from the campaign-finance scandal to the transferring of high-technology equipment and information to the PRC.
Readers can purchase
“Selling Out America,” at WorldNetDaily’s online store.