October 3, 2000
Gore vs. Bush: Earth in the Balance?
By Sam Parry
As Campaign 2000 enters its stretch run, the combination of high oil prices and a close presidential race has pushed the energy issue to the political forefront where it has not been since 1980.
Yet, lessons learned in the campaigns of two decades ago have not been lost on today’s major party candidates as they debate two of the biggest challenges of the new century: securing adequate supplies of energy and protecting the environment.
During the 1970s, presidents Gerald Ford and Jimmy Carter saw their popularity suffer due to gas lines and federal programs demanding energy efficiency from the American people. Given the political fate of those two presidents, losing in consecutive elections in 1976 and 1980, politicians largely have avoided making intrusive demands on American lifestyles since then.
Today, Texas Gov. George W. Bush’s strategy generally follows the politically popular course charted by Ronald Reagan and George H.W. Bush in the 1980s, opposing painful environmental restrictions and seeking greater oil production to meet U.S. energy demands. Vice President Al Gore tries to redefine the issue by putting energy conservation and economic vibrancy on the same side – though like President Clinton, Gore avoids confronting the American people with tough conservation standards.
In an energy policy address on Sept. 29, Gov. Bush, the ex-oil man, called for more oil drilling within the United States and its coastal areas, along with strengthened diplomacy toward oil-producing states to secure their petroleum at moderate prices.
One of Bush’s most controversial initiatives would open a part of Alaska’s Arctic National Wildlife Refuge to oil drilling. Bush also advocated construction of more nuclear reactors and research into cleaner burning coal. [For details, see Bush’s campaign Web site, www.georgewbush.com.]
By contrast, Gore stresses investments in new technologies for increasing fuel efficiency in cars and trucks and developing alternative fuel sources. Gore’s plan would encourage energy savings through a detailed list of tax credits.
More broadly, Gore sees his energy initiative as a “next stage” of economic progress for the United States. Gore says investing in clean, renewable energy sources not only will reduce U.S. dependence on foreign oil, but will help transition the national economy from one based on fossil fuels to one that invests in the energy sources of the future. [For details, see Gore’s campaign Web site, www.algore.com.]
Gore, who wrote the pro-environmental book Earth in the Balance (published in 1992), now is trying to rewrite the old political rule book by erasing the dichotomy that pits jobs against the environment. The Democratic nominee has tried to sell the notion that protecting the environment can be good for the economy and create – rather than eliminate – high-paying jobs.
“We don’t have to degrade our environment in order to secure our energy future,” Gore said in response to Bush’s proposal to open up the Arctic Refuge for drilling. “We shouldn’t invade precious environmental treasures like the Arctic National Wildlife Refuge in the pursuit of an energy solution that would take years to implement, and in the end, would yield just months of increased oil supply.”
Bush, however, portrays Gore’s policies as impractical and even laughable. Like his father – who mocked Gore as “Ozone Man” in 1992 because of Gore’s warnings about the emerging threat of global warming and other atmospheric changes – George W. Bush ridicules Gore and his positions.
“The vice president likes electric cars – he just doesn’t like making electricity,” Bush joshed during his energy speech.
Yet, behind the electoral strategies exist complex economic and political realities that have attracted little attention from the U.S. news media. Powerful economic forces have always driven the politics of oil – and that is still the case in 2000.
Like any market-based commodity, the price of oil is determined by the law of supply and demand. When supply and demand are in balance, prices are stable at what are deemed their natural levels. But when this balance is knocked out of whack, prices go up or down based on the relative strength of demand to supply.
Most oil experts agree that the spike in oil prices this year has been caused, in part, by a decrease in the supply of oil, particularly from the 11 nations that make up the Organization of Petroleum Exporting Countries (OPEC). That has coincided with an upward trend in the world’s demand for oil over the last two decades, particularly in the United States.
In the U.S., the popularity of sport utility vehicles (SUVs) and other light trucks has contributed to the rise in oil consumption. The fuel efficiency gains made in the 1970s have been effectively wiped out. As a result, the United States, with only 4 percent of the world's population, now consumes a quarter of the world's oil and is importing more than half of its supply. [International Herald Tribune, Sept. 26, 2000]
In total, the world now consumes more than 75 million barrels of oil every day, almost 20 million barrels by the U.S. This represents a global increase of 9 million barrels per day since a decade ago, a third of that comes from U.S. consumption.
Since the world produces around 74 million barrels per day, there is a shortfall of more than 1 million barrels. By contrast, a decade ago, the world was producing almost 1 million barrels of oil more than it consumed every day. [Energy Information Administration, www.eia.doe.gov/emeu/steo/pub/a3tab.html]
With demand now outstripping supply, prices spiked -- hitting to a 10-year high of $37.50 before falling back about 15 percent since President Clinton announced release of 30 million barrels from the U.S. Strategic Petroleum Reserve. Despite that short-term drop, prices seem likely to hold at historically high levels.
To ensure what they call a “fair price,” OPEC members want to keep supplies tight. OPEC has set this target price at $22 to $28, though countries such as Libya, Venezuela and Iran seem prepared to stabilize prices at an even higher rate, somewhere above $30. Venezuelan President Hugo Chavez declared that the world will have to get used to paying the true costs for oil production.
The financial problems faced by oil-producing countries like Venezuela represent the other edge of the oil price sword. Venezuela is a large but poor country with an annual government budget of $26.7 billion (compared to the United States' budget of $2 trillion), half of which comes from oil proceeds. Venezuela's official unemployment rate is 15 percent and an astounding 80 percent of Venezuela's 23 million people live in poverty. [Associated Press, Sept. 26, 2000]
When the price for a barrel of oil plummeted last year to less than $10, Venezuela and other OPEC nations were hit with devastating budget shortfalls. President Chavez was forced to slash Venezuela's government spending, a move that exacerbated a severe recession.
The spike in oil prices can be seen as helping oil-producing nations like Venezuela meet their national needs. Thanks to the increased revenue from oil prices, Venezuela’s economy, which shrank 7 percent last year, is expected to grow a modest 1.5 percent this year.
On the environment front, many oil-producing nations have yet to develop tough standards on par with the U.S. to deal with pollution associated with oil production. As a result, many of the facilities and pipelines are not monitored effectively and contribute to long-term local and national pollution problems. These hidden costs, which are not accurately reflected in the price of oil, often fall on vulnerable and poor indigenous communities dependent on the land for survival.
In recent years, non-governmental organizations have sought to hold oil companies accountable for these costs, with mixed success. Civil suits brought in U.S. courts against UNOCAL for its activities in Burma and against Royal/Dutch Shell for its activities in Nigeria have so far failed to achieve their goals of punishing these companies for oil extraction that damaged the environment and caused human suffering.
But these efforts have prompted growing public demands for new environmental standards to prevent companies from exploiting lower standards in the developing world, a position that has gained the support of the Gore campaign.