Like any self-respecting, New Dem-leaning Democrat under thirty-five I've greeted the charges of energy company price-gouging and price-fixing with a mixture of nostalgia and disbelief. I've got no affection for energy producers. It's clear they are reaping windfall profits from supply shortfalls which have dramatically ramped up prices. And I think it's well worth considering temporary regulatory interventions to prevent a massive transfer of wealth from consumers to energy companies over the next months and years.
But it's always been difficult for me to believe that energy companies had intentionally rigged the situation of constricted supply and inflated prices we currently face.
Today's Paul Krugman column on the Times OpEd page sets forth some of the reasons why you don't have to be a wild conspiracy theorist to believe that price manipulation and intentional supply shortfalls by energy companies had a lot to do with the California energy crisis. He also explains why political pressure to end such skullduggery has likely been a strong factor in the surprising, but little reported, turnaround in California in recent weeks.
But what really opened my eyes on this question was a report released almost two weeks ago by Oregon Senator Ron Wyden which included internal energy company memos detailing plans to reduce refining capacity to pump up profit margins. If that's true it's extremely damning because the argument from the oil companies and their supporters in the Republican party has been that our big problem is a dearth of refining capacity due largely to restrictive environmental policies and the lack of that oil man's holy grail A National Energy Policy -- and of course some miscellaneous screw ups by Bill Clinton.
Wyden's argument is that oil companies conspired (that's an inflammatory word, I grant you, but technically correct, at least) to close down refineries to prevent oversupply and low prices -- partly by running independent operators out of business. The evidence provided by Wyden isn't dispositive. But it's impossible to dismiss out of hand. What seems quite clear is that a number of oil company execs were thinking along these lines. What you'd want to know is just how widespread it was and how large a role it played in our current predicament. Wyden's findings were striking enough that I'm surprised they didn't generate more attention. These questions definitely call for holding hearings and investigations and Democrats are planning to do just that.
Here's the kicker though. A few days ago I said that despite the numerous wouldashoulda scandals coming out of the Bush White House today there are some potential scandals that very much deserve looking into -- both on political grounds and just on the merits.
This is one of them.
In case you've forgotten our new president comes out of the oil industry. Just as important, our new vice-president (and the architect of administration energy policy) spent the last half dozen or more years running a major oil industry concern. If the charges in the Wyden report bear out, that is, if it turns out that there were widespread efforts to reduce refining capacity in the middle 1990s to drive up prices, it's very hard to believe an oil industry executive like Dick Cheney wouldn't know anything about. If he did know about it, his energy plan isn't just ill-conceived, it would be premised on a massive deception, and a utter disregard of the public interest. That would be politically devastating for the administration and deservedly so.