May 4, 2002:  At the White House, they are passing out questionnaires to everyone asking what their personal involvement with Enron has been.  There's probably so much of it that without the survey, nobody knows the whole picture.  But somehow I don't think Secretary of the Army Thomas White's questionnaire is going to say "Illegally used Enron's shell companies to bid up the prices of lots of electricity with fake trades during the California power crisis."

Ken Lay's wife is opening an antique shop.  Mr. White had probably better start thinking about other career options too... though, like Mrs. Lay, he probably has no need to work, since he sold off his Enron stock at its peak.

This week's San Francisco Bay Guardian has a cover story about an unrelated bit of Bushian corruption: Kellog Brown & Root, a subsidiary of Dick Cheney's old oil company, Halliburton, is being given a lucrative cost-plus contract to perform service & support for soldiers in and around Afghanistan -- including building and running whole bases -- that would normally be done by soldiers.  And these private contractors would have helmets and guns just like the soldiers.  Even aside from the graft aspect, the idea of commercial mercenaries gradually replacing bits of our armed forces is rather chilling to me.  One consumer advocate criticizing this deal fumed, "Why not just have Enron run America?"  This guy, Harvey Wasserman, has a book about power deregulation.

It should be noted that Halliburton has an unsavory history with the IRS -- during the late nineties the government had fourteen lawsuits going against their various subsidiaries, to get them to cough up the taxes they were trying to shelter with a phony Cayman Island shell company and other bullshit.

One minor bit is that George W. Bush recently called for substantially increased insurance coverage of mental illness... after his father George H.W. Bush recently invested in a company that would be providing a lot of institutional care for the mentally ill.  There's nothing really wrong with any of this, but it just seems so Bush-like that even when doing something that needs doing, they always manage to mix some of that "appearance of a conflict of interest" factor into it.

A U.S. Senate committee has been questioning representatives of various oil companies about whether they've manipulated prices of gasoline, periodically holding back supply to create repeated price spikes and never letting the price settle down.  The companies testified that all the irregularities of supply are caused by federal regulations and environmentalists.  The fact that the senators had a 1999 BP-Amoco memo in hand discussing ways to cut supply and drive prices up was dismissed as irrelevant by those testifying.  They described the ideas in the memo as "brainstorming", and that senior executives immediately rejected the ideas as "inappropriate", and that its authors were immediately "counseled" by management, and it's just coincidence that the market after that time had the type of repeated sudden shortages foreseen in the "brainstorming".

Another memo from Marathon described a hurricane that stopped refinery production for a while in these terms: "Nature stepped in to lend the oil producers a helping hand."  That memo also praises OPEC's success in reining in production.

But in the end, as with past attempts, nobody managed to show illegal collusion... though it is suggestive that Texaco got singled out in some memos as a "wild card" because they showed signs of actually competing and underpricing the other companies with a new flavor of imported gasoline.  Carl Levin (D-Mich.), the chair of the committee, concluded simply that the business is now concentrated into so few hands that a fair amount of semi-monopolistic price manipulation is possible without collusion being necessary.

Maybe if the oil companies get away with this, the Senate will reconsider its attitude that every American mom has the God-given right to drive a gigantic SUV everywhere, and revisit the question of promoting some better car mileage -- a measure they recently rejected.  A modest improvement in car mileage would "produce" more gasoline than drilling in the Alaska National Wildlife Refuge would have... and not since before the first oil shortages of the seventies have we been in a position where improving mileage would be easier, because we have never since then been so extravagant and wasteful with our vehicles as we are now.  It seems like when I'm driving nowadays, half the time I can't even see past the monstrosity in front of me.  (Why is it that the taller the SUV, the higher the odds that its windows are tinted dark?)

I'd love to see more corporations held accountable for general crookedness, but overall I don't really feel that cheap gasoline is good for us.  If the price we paid covered all of its hidden costs, we'd probably be paying as much at the pump as they do in Europe, and using it a lot more wisely as a result.

Here's one case where oil companies got caught: a San Francisco superior court jury has ruled that Shell, Lyondell Chemical (formerly Atlantic Richfield Chemical), and Tosco (now part of Phillips Petroleum) withheld information about the environmental dangers of the gasoline additive MTBE.  It ruled that they had therefore sold a "defective product", and had "acted with malice" in withholding the information.  The case was a lawsuit by the South Tahoe Public Utility District, which had to close a third of its drinking water wells due to MTBE contamination.  The amount of damages to be awarded is not yet settled.

The state was supposed to have all the MTBE out of its gasoline by now, but it's still there, due to legal obstacles thrown up by the MTBE sellers.  (Including a Canadian company that is suing the state under international restraint of trade agreements -- the sort of thing the World Trade Organization promotes... they are apparently alleging that it is illegal for us to stop buying their product just because we don't want it any more.)  But now that the Bush people have endorsed enforcing that California must use ten percent ethanol in our gasoline, that should finally put an end to MTBE.  Of course, we could have replaced it with far less ethanol.  The ten percent figure came as a total surprise to environmental scientists -- they see it as a pure political favor granted to the Republican midwest, or to farm lobbies in particular, at California's expense, and the Governor is suing the EPA on that basis.

It looks like MTBE isn't going to be fully replaced with ethanol until 2004, though some companies will be switching earlier.

In one odd twist of the ethanol case, the EPA is finding that "most, if not all" facilities producing ethanol for gasoline are emitting far more airborne pollutants, including carcinogens (formaldehyde, acetic acid, etc) and carbon monoxide, than they said they would.  I think this suggests that not all of the EPA is behind the plan to force gasoline ethanol levels up to ten percent (which is considered the highest amount that is safe to use with current engines).  As a rule, the plants are being cooperative about installing equipment to burn off the unwanted fumes.

The S.F. Chronicle published a three part summary (pt. 1, pt. 2, pt. 3) of the whole state power crisis.  The final section makes the point that the deregulation mistakes we made are still partly uncorrected.  They seem to have come around to a view of the crisis that, a year ago, got a hearing only in leftist alternative weeklies, even though most of the facts necessary to reach this conclusion were already available.  If Enron hadn't gone belly-up, they might still be looking the other way... only that catastrophic evidence of something being grossly wrong got the mainstream media to look back at what had actually happened during the power crisis.

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