JAN 1 - 15, 2003






Immediately after former President George H. W. Bush visited Saudi Arabia in 1998, the Saudis slashed production, sending oil prices up over 225%, oil company profits up over 33,000% (this is not a typo, we mean 33,000%,) and creating a crisis that moved to the forefront of the 2000 Presidential Election, helping his son George W. Bush get elected.

by Samuel A. Stanson


JANUARY 2, 2003 –  "Former US President Bush... arrived in Kuwait on Tuesday for a two-day visit.  Bush will hold talks... with high-ranking state officials on regional and international issues... Earlier in the morning Bush concluded a five-day visit to Saudi Arabia, during which he met with King Fahd Bin Abdul Aziz and Crown Prince Abdullah."

So read the story in the Arabic News on December 12, 1998.

Oil prices were at the ultra-low price of $9.70 per barrel at this time.  The American economy was coasting along, and no energy shortage was in sight.

A few months later, in March of 1999, Saudi Arabia led a meeting in the Hague of OPEC nations and formed an agreement to slash production.  Soon after, oil prices began to rise, jumping up to $12.75 per barrel by mid-march for April selling, and by mid May, oil prices had almost doubled, reaching $16.5 per barrel.

Already by April of 1999, the increase was starting to hit consumers' pocketbooks.

"The price of gasoline in the United States has been creeping up in recent weeks and, according to the government, could rise even more by summer," CNN reported on April 9, 1999.  Another CNN article on June 27, 1999 reported that the reason gas prices were rising was "because of oil production cutbacks."

By this they meant the oil production cutbacks the Saudis and other OPEC nations undertook almost immediately after meeting with former President Bush, whose son, as luck would have it, was just on the verge on launching a run for the White House.

By the time the 2000 election rolled around, oil prices were a full-fledged issue and provided just enough of a drag on the economy to put a little doubt into people's minds about whether or not things would continue as well as they had for the rest of Clinton's time in office.  Battles over whether or not to use the strategic oil reserves became hot issues and were used to dent Al Gore's election bid, and Clinton/Gore's inability to stem the drastic rise in oil prices that occurred following former President Bush's visit, for no publicly announced reason, with the heads of state of the OPEC nations, allowed just enough of an opening for his son, George W. Bush, to have a chance at getting into the White House.

It all began with some very unhappy oil people but a very happy American economy.  The price of oil was $9.70 a barrel.  Then former President George H. W. Bush visited the allies he had from back in the Gulf War, the king of Saudi Arabia and other mid-east oil nation heads of state.

A few months later, oil was up to almost $13 a barrel, then almost $17.  In fact, how drastically did world oil prices spike after President Bush took his tour of mid-east oil producing nations for no stated reason?

As Lawrence Goldstein, president of the non-profit Petroleum Industry Research Foundation, told the NewsHour with Jim Lehrer on November 23, 1999, "...erosion in stocks has led to a very dramatic increase in crude oil prices from a low of about $11 to $12 dollars earlier this year to $27 dollars today."  This was less than a year since former President Bush made his mid-east rounds, and about one year before his son would try to win an election to the White House.

A jump like that has an immediate effect on people's pocketbooks in a negative manner.  For the average consumer, within this 11 month period, gas prices alone rose between 30 and 35 cents a gallon, not to mention a spike in heating oil and natural gas prices that paralleled.  This sudden rise in gas and energy prices began to put a bit of speed bump in front of the previously soaring Clinton economy, allowing a bit of heretofore unthinkable economic doubt to enter into the election cycle.

While the OPEC oil production cuts had a major role to play in the drastic rise of gasoline prices, there's more to gas prices than just oil supply.  As California Attorney General Bill Lockyear said in a report released one day before the above report, on November 22, 1999, "Our concern is that high gas prices in California are the result of low competition in the market."  The article states that Lockyear cites, "the concentration and control oil companies have over the production and sale of gasoline," as one of the major causes for rising consumer gas prices.

In other words, Saudi Arabia and its OPEC partners cutting production drastically following the meeting with former President Bush in December 1998 was one prong of the action that caused the spike in energy prices that would become a central issue of the 2000 President election.  The other was power energy companies.

Consolidation of the refinery and gasoline production industries put more power in fewer hands - hands which drastically wanted both higher energy profits and the son of an oil man, George W. Bush, in office.

As reported in the oil industry trade journal, Drilling Contractor, Chairman of America's predominant oil refinery company, Halliburton, was not so upset about the rising oil prices.

"We think 1999 is a trough, and 2000 we think will be significantly improved over that," said the Chairman, a man named Dick Cheney.

And he could not have been more right.  Look at what happened with a company named Anadarko, a Houston based petroleum company which, as luck would have it, is the company Dick Cheney holds more stock of than any other, save for his former company Halliburton.

As reported on July 30, 2000 by the Houston Business Journal, Anadarko's income rose a breathtaking 33,166%.  Look at this number again - this is not a typo.  Not 33,166 dollars, not 33.166 percent, but in one year Anadarko's income rose thirty-three thousand one hundred and sixty-six percent.  In raw numbers, "Anadarko reported income rose from $2.4 billion in 1999 to $796 billion in 2000."

In fact, Anadarko was not alone in making such a leap.  As the July 2000 Houston Business Journal reported, "Of the 15 new companies listed on this year's top public companies list, nine are energy related."

While OPEC oil cuts were partly to blame for the massive, ultra-rapid rise in energy prices, the other prong of the attack was being led by energy companies.  As CNN reported on February 16, 2000, "Gasoline prices have been rising steadily since last March, when OPEC cut crude oil production by 7.5%, or more than 2 million barrels a day..."

However, that alone was not the only cause for the sudden spike.  "Part of the problem is that U.S. refineries normally increase production of gasoline during the first three months of the year... That is not happening this year."  Refiners, CNN reported, were cutting back because of high oil prices and short supply.

What CNN doesn't mention is that cutting back on refining at a time when oil is in ultra-short supply also helps to further drive up oil prices - this is the "concentration and control oil companies have over the production and sale of gasoline" that California Attorney General Lockyear talked about.  The oil companies argued that they couldn't afford to keep refining in this market, and yet their profits were increasing over thirty-thousand percent.

Enter Election 2000.  As reported in this same CNN report, by February of 2000 - perfectly nine months before the election - oil and gas prices had now become a front and center issue.

"Unhappy with what they're paying at the pump, Americans already are talking about curtailing their driving just as resorts and other vacation spots are starting to gear up for summer."

"It's ridiculous at this point," one person was quoted as saying.  "I do as little driving as possible because it's so expensive."

Tapping into the strategic petroleum reserve was being considered, and the Clinton administration had to release $200 million from the Low Income Home Energy Assistance Program - money that went directly to energy company and OPEC country profits.

Because remember, there was no actual cause for this drastic increase in oil prices from $9.70 to over $27 or for gas prices to shoot through the sky except that, following that December 1998 meeting with former President Bush, first the people he met with in the Middle East, and then his Texas oil company associates in the U.S. decided to run prices up higher by cutting supply and reducing refinery production.  There was no war or conflict that caused this price rise, nor shortage of oil available for drilling.  It was a simple choice on the part of parties that George H. W. Bush visited and knew to "boost prices."

While most Americans were starting to feel the pinch of rising energy prices, the very people who would donate to Governor George W. Bush's presidential campaign were seeing a surge, and, not coincidentally, donating by the bundle.  George W. Bush would go on to shatter all fundraising records, being the first candidate to ever waive matching funds and raise over $100 million dollars.

In the meantime, the Clinton administration tried to fight back.  Energy Secretary Bill Richardson hosted an "energy summit" in Boston to hear consumer complaints, and then met with leaders in Mexico, Saudi Arabia, Kuwait, and other OPEC nations to try and and "reason with them."

"(I will) talk to OPEC and non-OPEC members about the importance of... having more supply of oil on the market," said Richardson, as reported by CNN .

So then the Saudis and other OPEC nations were in the middle of a feud - and not so coincidentally smack in the middle of our presidential election.  On the one hand, former President George H. W. Bush, his oil company allies, and his son the presidential hopeful, wanted them to keep production at the reduced level at least through the end of the election cycle, while the current Clinton administration and presidential hopeful Vice President Al Gore wanted them to get producing again.

The Saudis and OPEC, unsure of who would win the Presidential election, had to work constructively with the Clinton administration, hedging their bets in case Al Gore became the next President.  On July 4, 2000, they began to ramp production back up, agreeing to add 500,000 additional barrels a day to the market until prices came back down from prices then over $30 a barrel to a more moderate $25 a barrel - still almost 300% higher than they were before former President Bush's visit, but over a 25% drop from the astronomical prices oil had risen to.

And yet, the situation did not improve.  Clinton turned up and turned up the pressure on OPEC, but gasoline and domestic energy prices remained extremely high, keeping the issue alive, and indeed adding a bit of doubt to the economy, throughout the presidential election cycle.

The reason Saudi Arabia and OPEC's reversal at the behest of the Clinton administration did not usefully reduce the high price of energy in America was that the domestic refinery and petroleum companies - companies like Halliburton and Anadarko - did not follow OPEC's lead.  They were intent on keeping energy prices high.

As OPEC member, Venezuelan President Hugo Chavez, told News Perspective Quarterly in 2001, "(OPEC) alone cannot determine prices.  For example, refining capacity is not being totally utilized. In the US, refineries are not operating at full capacity."

In other words, Halliburton, Anadarko, and the other US oil and energy companies were operating in a manner that was keeping energy prices high, and there was nothing Saudi Arabia or OPEC could do about it.

And so, from ultra-low oil prices of $9.70 a barrel, immediately following a visit with the heads of state of several mid-east OPEC members by former President Bush, world oil prices jumped over 220% within a year and a half, pumping billions upon billions of extra dollars into the pockets of would be George W. Bush supporters, creating a major issue in the 2000 presidential election, and putting a speed bump in front of the economy which allowed an opening for the younger Bush to have a shot at winning the election.

The energy issue picked up steam as the election neared.  The Bush campaign derided Gore for tapping into the strategic oil reserves and attacked the Clinton/Gore administration for allowing this "energy crisis" to occur.  When in June of 2000 Al Gore's campaign released an energy plan brought on by a need to deal with the energy price crisis, the Bush team whacked away.

"In a transparent attempt to fix a political problem with voters angry over higher gas prices, Al Gore is offering recycled ideas that will not reduce our dependence on foreign oil," said Bush spokesman Dan Bartlett in a news release," as reported by Reuters on June 28, 2000.  As this quote shows, voters were now angry about the energy price situation and it was a central issue in the presidential campaign.

The Bush campaign further attacked Gore's release of the plan, deriding it as, "a knee-jerk response to a sudden spike in gasoline prices this election year," according to the Reuters report.

The Bush team failed to mention the causes for the spike, of course.

Instead, as with Professor Harold Hill in The Music Man, a problem was created and then harangued about.  For those who have seen the Bush administration seemingly create problems only so they can assail someone else for them and claim to be the saviors America needs to fix the problem, this is the first example to be seen of this.

The evidence is clear.  As Bush spokesman Ari Fleischer said, as reported by AP, while gloating in December of 2000 over Bush's recent victory in the presidential election, "It wasn't until September of 2000 that anyone in power started talking about an energy problem."

First of all, we can see that he was lying, as he so often did - above we see that in June of 2000 Al Gore had presented an energy plan to deal with the problem.

But in any case, Ari makes the more important point:  that no one foresaw this crisis coming.  His conclusion about this fact is completely off the mark, however.  Fleischer's asserts that the sudden, from out of nowhere appearance of this energy crisis showed that, "In Washington, we need to do a little better job of looking down the road," a slam at the Clinton/Gore administration, asserting that it was their inattention to a looming energy crisis that led to the whole mess that helped sweep Bush into office.

In reality, we see clearly that the reason no one foresaw the crisis and that nobody "in power started talking about an energy problem" until mid-2000 was because there was none to talk about.  In fact, at no point was there ever an energy problem.  As would be the situation in California the following summer, lack of energy had nothing to do with the problems that occurred.  The only thing that was at fault were people conspiring to create a seeming crisis so as to drive prices through the roof.

As Enron did a year later, Bush's Gulf War allies and US oil company friends conspired to create a crisis that no one could have foreseen, that helped to shape - and very possibly decide - a presidential election, and gave countless wealth to those who participated.  And the campaign of George W. Bush took advantage of it at every turn, casting blame on those who had no part in the problem, and presenting themselves as heroes who would save America from the crisis their friends and allies had drummed up in the first place.

This was manipulation of markets and elections at its worst.  And while the rest of the media has given the Bushes a free pass on it, we at The Moderate Independent are now here to report the actual news, comprehensively and in its full context.  This should be the biggest story of the millennium so far.  Now we are putting it out there so it may be.

The Harold Hill pattern has been followed again and again by the Bush administration:  they failed to act to prevent 9/11, and then said we should thank God they were there to deal with the crisis; they presented exaggerated evidence to make Iraq seem a "pool table, with a capital P" type problem, and now claim to be heroic for saving us from this exaggerated problem; and, of course, President Bush took advantage of Enron's bilking of California - which, not so coincidentally, employed the same scheme we see above - to try and pass his energy bill allowing, among other things, drilling in the Artic Wildlife Preserve and, ultimately, to overthrow the duly elected governor of California.

But George W. Bush would not have been able to do any of these things had his possible first swindle - the manipulation of energy markets to help him get elected - not occurred.

NOTE:  This is part one in an occasional series.  In part two, we will continue the coverage of this story with a study in how Enron followed the Bush campaign's lead in crafting and employing its scheme to bilk California out of billions, and how President Bush used the situation as a political hit on a Democratic foe.






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Media Watch

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Elections 2004

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