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Week 6 - February 11th - 2002 |
| David
Seaton's Energy Links® Commentary
The Middle East is hot. Bush is heating it up further. Fear is the name
of the game. Americans are frightened and need reassuring. In his State
of the Union "Axis of Evil" speech Bush managed to frighten nearly everyone.
He frightened Iraq and Iran and the Arab countries, he frightened the European
Union, Japan, Philippines and South Korea. In fact the only person in the
world he probably didn't frighten was Osama bin Laden whom Bush doesn't
mention much anymore. In contrast to the Middle East Enron has been quiet
this week that is if you don't count all their late management taking the
Fifth Amendment before Congress. The dangers involved in the scandal are
becoming clearer by the day, however. The first effect is to investment
as the ripple effect of the implications of such fraudulent accounting
procedures move through economy. How to take sensible business decisions
without reliable numbers? The other is political. Investigative journalists
are "drawing lines between the dots" connecting high finance to high/low
politics for over ten years of American and international life. The resulting
portrait of the nineteen nineties is much like the painting in the attic
in Oscar Wilde's "Portrait of Dorian Grey". What seemed so pretty is now
seen in the cold light of day to be ravaged and raddled by its vices.
David Seaton
David Seaton's Energy Links®
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| State
of the Enron (Rich - New York Times)
I had just finished crying over the tragic news that President Bush's mother-in-law had lost $8,000 on her Enron stock when another heartbreaking story sent me reaching once more for the Kleenex. There on the "Today" show this week was the sobbing figure of Linda Lay, Ken's wife, telling America the most rending tale of dispossession since the Yankees stole Tara from Scarlett O'Hara. "Other than the home we live in, everything we own is for sale," said Mrs. Lay. "There's nothing left." Given that her husband has received some $200 million in compensation from Enron since 1999, and that he (as she explained) was kept in the dark about his own company's shell games, the message was clear: The Lays are the biggest victims of the entire scandal, bigger victims by far than those grandstanding employees who complain of having lost pensions in the piddling five, six or seven figures. As if the Lays' predicament is not upsetting enough, the "Today" show left us wondering if the second-biggest victim of Enron's collapse may be the Holocaust Museum Houston, whose representative came on- screen along with various clergy and Lay offspring to testify to the family's beneficence. If the Lays are broke, you had to ask, is it only a matter of time before the Holocaust is consigned to the Houston memory hole along with the Astrodome? I'd still be weeping as copiously as Linda Lay had I not subsequently read in The Wall Street Journal that she and her husband still owned 18 properties in Texas and Colorado, only two of which are up for sale, and that Ken Lay still owned $10 million in non-Enron stocks. Thankfully, others are lending emotional support to the couple in my stead. After ministering to Mr. Lay, Jesse Jackson likened him to Job. Click here to read more Contents |
| Money,
Energy Politics and Enron's Costly Misadventure (New York Times)
As the problems of Enron have unfolded, the White House has persistently maintained that no American official did anything specific to help the company when it was heading toward bankruptcy. Apart from evidence that the administration's energy policy was largely consistent with Enron's goals, that claim has gone mostly unchallenged. But there was something quite specific that Mr. Bush's top aides did to help Enron last year before the hollowness of the company became clear: they lobbied to avert the shutdown of a $2.9 billion power plant in India built by Enron and two other American partners, Bechtel and General Electric, with some participation by Indian financial institutions. This lobbying was testimony not only to Enron's importance as an investor abroad but to its political influence at home. The company contributed to both Republicans and Democrats. Indeed, it was the Clinton administration that first came to Enron's aid when it was trying to get the plant built in the 1990's. The White House has acknowledged that Vice President Dick Cheney and other members of the administration pressed Indian officials last year to pay Enron the money owed to it from the purchase of power generated by the 2,200-megawatt plant, located south of Bombay. At the time of Mr. Cheney's intercession, Enron's troubles were only beginning to surface; few thought that they threatened the company's future. More specifically, Mr. Cheney is said to have raised the subject of back payments with Sonia Gandhi, widow of former Prime Minister Rajiv Gandhi and current head of the once-dominant Congress Party, now the leading opposition party. If so, Mr. Cheney went to the wrong person. Mrs. Gandhi would have even less room to maneuver than other Indian politicians because of her sensitivity to the issue of foreign influence. Mrs. Gandhi was born in Italy and is acutely aware that her late husband was accused of getting kickbacks from a Swedish arms maker. Any bailout would be complicated by politics. The Hindu nationalist government of Prime Minister Atal Behari Vajpayee has been loath to act because doing so would benefit Mrs. Gandhi's Congress Party, part of Maharashtra's ruling coalition. Click here to read more Contents |
| Budget
Plan Fuels Energy Debate (Wired)
The Bush administration's $2.13 trillion budget proposal puts the United States back in the red and has energy experts feeling blue. While the White House said on Monday that defending against terrorism warrants the first deficit spending in five years, experts said the plan does little to address another threat to Americans -- dependence on foreign oil. "Our first priority must be the security of our homeland," reads President Bush's budget statement, which projects an $80 billion deficit for 2003. To address domestic security, the budget proposal increases military spending by $48 billion, and sets aside $37.7 billion for homeland security. But expenditures to reduce foreign-oil dependency -- which Bush officials increasingly recognize as a national security threat -- are a mere drop in the budgetary bucket. According to the Department of Energy, the United States currently relies on foreign oil for more than half of its energy needs. "Our energy and science programs should be judged by whether they advance our nation's energy -- and hence, national security," energy secretary Spencer Abraham said Monday in a prepared statement. Click here to read more Contents |
| Detroit's
Oil Riches (Los Angeles Times)
Toyota and Honda are already mass-producing gasoline/electric hybrid cars that get more than 50 miles per gallon. Plenty of conventional cars get more than 30 miles per gallon and could do even better with technology that already exists. Even a small boost in automobile gas mileage would dramatically reduce U.S. dependence on foreign oil. None of that has moved Congress to update national fuel economy standards, stuck for a decade at an average of 27.5 miles per gallon for cars and 20.7 mpg for SUVs, minivans and other light trucks. President Bush too is dodging the issue. In the budget proposal he released Monday he calls for an obvious stall: another study to decide whether fuel economy standards could perhaps be raised. Apparently the only people in Washington with an ounce of guts concerning auto mileage are Sens. John F. Kerry (D-Mass.) and John McCain (R-Ariz.) and their allies. They are writing a bill requiring manufacturers to improve car and light truck fuel economy by about 5% in their 2005 models. The expected economies would increase over time, saving 2.6 million barrels of oil daily by 2019--roughly the amount the United States brings in each day from the entire Persian Gulf. In a letter to Congress last Friday, Transportation Secretary Norman Y. Mineta parroted Detroit auto makers' latest argument against raising fuel efficiency, claiming it would undermine passenger safety. Mineta said he was "deeply concerned" about a recent finding of the National Academy of Sciences that raising fuel economy standards could cause "many additional traffic injuries and fatalities." Click here to read more Contents |
| Russian
rigs to the rescue (US News And World Report)
Neither ice nor snow nor promises to OPEC slowed the pace of oil tanker traffic this January in the Black Sea port of Novorossiysk. And as ships crowded Russia's main terminal for petroleum exports, the world price of crude--already stunningly low--slid further. For this good news for consumers, and bad news for the oil producers of the Middle East, thank the latest incarnation of the Russian bear. Russia's oil industry has awakened from long hibernation with a clout that is helping to claw down world prices, blunt the edge of the U.S. recession, and reduce worries that the war on terrorism will disrupt oil supplies. Indeed, the developing oil alliance is one of the most tangible examples of the support that Russian President Vladimir Putin offered when he raced ahead of all other foreign leaders to phone President Bush on September 11. But much stands in the way of Russia's emergence as "a separate nucleus of the energy equation," as U.S. Energy Secretary Spencer Abraham recently put it. To exploit frozen and remote oil fields, Russia needs more help from foreign investors and oil firms. They're wary of Russia's history of uncertain laws, high taxes, stultifying bureaucracy, and corruption. Plus, there's the real danger that Russia's oil boom could quickly go bust, thanks to the low prices its own policies help to create. Click here to read more Contents |
| Tempted
by Oil, Russia Draws Ever Closer to Iraq (New York Times)
President Bush may have plenty of reasons why Russia, his new ally in the war on terrorism, should stop cozying up to Iraq, one of the states he sees as part of an "axis of evil." But Leonid Fedun has 20 billion reasons why Russia should not. Mr. Fedun is vice president for development at Lukoil, Russia's biggest oil company. He oversees a 23- year contract to develop Iraq's West Qurna oil field - 667 million tons of crude, a half-million barrels a day. It is potentially, he says, a $20 billion moneymaker. But only potentially. Thanks to United Nations sanctions on Iraq, Lukoil has not pumped a drop from West Qurna since it won drilling rights in 1997. With the United States now talking openly of ousting President Saddam Hussein of Iraq from power, Mr. Fedun wonders whether Lukoil ever will pay off. "If the Americans start military operations against Iraq," he said, "we may lose a contract, and American oil companies will come in our place. No one has ever said the opposite." For two nations that have jointly pledged to stem the spread of terror, weapons and the despots who would use them, agreeing on what to do about Mr. Hussein is the first serious test of their wobbly new friendship, with pragmatism and suspicion rife on both sides. "I'm very critical of Russian supporters of Saddam," said Andrei Kozyrev, former President Boris N. Yeltsin's first foreign minister and one of the United States' more consistent supporters here. "But speaking about Washington, it's a very, very awkward, very simplistic and inflexible approach they take toward Iraq. There's a lot of room for improvement." Click here to read more Contents |
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