International Politics

Nov 2002 Vol. 223 No. 11  International Politics

John McCaughey,  Contributing Editor,  Washington

Plus ca change, plus c'est la même chose (The more it changes, the more it is the same). Energy hacks face many difficulties, especially in Washington. Partly, it is the task of reporting what one knows to be lies. And if that doesn't work, one has to painstakingly make up one’s own lies. Such is emphatically the case in the run-up to the 2002 elections.

 Energy policy is a key part of the election, with control of Congress lying in a few tight races. Most of these are in the oil patch, including such energy-producing states as Texas, Colorado and New Mexico. A lot of the voters in these states have a direct, personal interest, in that they are employed in the oil and gas industry. Yet, it is hopeless to try to predict what will happen in November. And over it all hangs the threat of that most dangerous of political animals: the lame-duck Congress, which can do anything it wants to do without fear of political repercussions.

 On the other hand, perhaps it is not so difficult after all, and a few constants do shine through the fog. The much-touted energy bill (replete with controversial items like electricity restructuring, ANWR, ethanol subsidies and greenhouse gases) will probably fail or be emasculated, leaving all that weary work to be done again next year. About the only thing that is certain is “plus ca change” – that is, that things will stay pretty much the same in energy. Why? Because, while it is important which party controls the bodies on Capitol Hill (the majority party gets to appoint committee chairmen, select the House Speaker and dictate the agenda), the cherished Senate rules still leave us with that old filibuster problem.

 Therefore, unless either the Democrats or the Republicans achieve an iron-fisted control of the Senate, just about any substantial group of Senators will still have the ability to stall bills and prevent them from passing.

 Let’s look, for example, at access to federal lands for oil and gas exploration – something that the Republicans want and the Democrats generally do not want. Presuming that the Republicans capture the Senate, they could get a bill into committee, out of committee and onto the floor.

Even if Republicans gain control of the Senate, it does not necessarily mean that access to federal lands, such as this producing site near Price, Utah, will be any easier. (Photo courtesy of the Bureau of Land Management.)

 However, if one could find 40 senators who don’t want that access, then everything will be stalled and the situation entirely unchanged, or SNAFU, as they say. Interestingly, such a group might be bipartisan, because many Northeastern Republican senators – acutely conscious of the environmental vote – have little sympathy for issues relating to oil and gas drilling access on federal lands. Independents account for about 40% of crude oil and 65% of natural gas produced in the U.S. They are not slow to point out that gas demand (much of it to fuel electricity generation) is growing sharply in the U.S.

 Still, it is highly unlikely that the November 2002 election will undo Capitol Hill’s gridlock. It is more probable that the results will interpreted as inconclusive, and Queen Gridlock will remain on her throne. Put another way, the North American oil and gas industry will likely get little or nothing from this year’s elections. They will also lose a stalwart friend in a high place, because Sen. Frank Murkowski (Republican-Alaska) is off to run for the governorship of his state. Ironically, if the Republicans would regain control of the upper chamber, he would be Senate Energy Committee chairman.

 Over everything in Washington in the run-up to the election (aside from the serial-killing rifleman who is terrifying the area) hangs the prospect of war with Iraq. From the oil industry’s point of view, this would be very much a mixed blessing – as much as it threatens to destabilize the Middle East and the global economy, such a war is also certain to send oil prices soaring. Crude prices are up nearly 50% this year, propelled mainly by what is called in Washington-speak “the fear factor.” In oil price terms, few in the capital city are predicting where it could all end, if war occurs. The prognosis is incalculable.

 Domestically, too, Enron’s grim shadow (and related financial catastrophes) hangs over the oil and gas industry. Energy companies that borrowed heavily in the boom years now find it far more difficult to obtain badly needed financing. Among investors, the energy industry is out of favor. For oil and gas companies, it is the Year of the Bear. In Washington, too, officeholders are anxious to make political capital out of chastising any energy industry culprits that can be subpoenaed.

 As the so-called solons on Capitol Hill have struggled to achieve something on the energy bill, one congressman’s aide opted for optimism. “Maybe they’ve figured out how to thread the needle,” he said. One hopes not. In more cynical Washington circles, it is held that the highest praise that can be bestowed upon a politician in his obituary is the words, “He achieved nothing.”  

 John McCaughey edits and publishes Energy Perspective, a Washington-based, fortnightly publication that features in-depth coverage of major energy topics. Mr. McCaughey has written and edited for Irish newspapers, an international news agency, the London-based Financial Times and the U.S.-based Energy Daily newsletter, and contributed to many other newspapers. He is a regular contributor to this column.