Now that we have an oilman in the White House, don't expect miracles.
There is no doubt George W. Bush will be a much, much better president for the oil business than Al Gore would have been. In fact, I hate to think what would have happened if Gore had been elected, especially with Congress divided as it will be for the next 2 years. He probably would have made the president of the Sierra Club Secretary of Energy-and we all would be freezing in the dark with his energy policies.
Two or three things seem certain about the short-term outlook for oil under the new administration (see related special report, p. 66). It is a given that any efforts to increase US drilling by opening acreage now off-limits will bring a rash of protests from environmentalists. And you can bet the consumer advocates will blame any increase in gasoline prices on the new president and his buddies in "Big Oil"-whoever they are.
At some point, however, President Bush and Vice-Pres. Dick Cheney should get some credit for knowing the industry well enough to keep the US from being totally dependent on foreign supplies. It will be interesting to see how the vice-president handles the Organization of Petroleum Exporting Countries. He comes with very high international oil credentials not only from his past government experience but also from his term as chairman of Halliburton Co. The American public may never recognize his expertise, but you can bet OPEC ministers know Cheney and his record well. That has to be a plus for the US, whether it is publicly recognized or not.
Role of Congress
It is always interesting to speculate about how the industry will fare under a new president. At the end of the day, though, it is the makeup of Congress that really determines the vicissitudes of much of the country's energy policy. And, unfortunately, there are still more members of Congress from consumer states than from oil-producing states. That means George W. Bush is going to have a tough time selling any change in energy policy.
It is really easy to determine who have been the greatest presidents for the oil business. It is those presidents who served when Lyndon B. Johnson was running the Senate and Sam Rayburn was ruling the House with an iron hand. These two Texans had enough power to protect the oil business from anyone who had designs on punishing it.
Carter best for PennWell
There would be no contest if you picked the president that has been the best for PennWell Corp., OGJ's parent company: Jimmy Carter.
President Carter did PennWell a great favor when he slapped price controls on crude oil. His administration made such a mess out of controlling the price of oil that it created a great demand for information on the crude oil price regulations. PennWell capitalized on the situation by launching a Washington, DC-based newsletter, Capital Energy Letter, which was dedicated to interpreting and reporting the new price controls.
Jim Collins, a long-time Washington oil and gas reporter, came up with the newsletter idea. He contacted Gene Kinney, OGJ's Washington editor at that time, who in turn brought the idea to OGJ management. Forming a joint venture with Collins to publish CEL was a no-brainer. We quickly set up the organization, wrote a promotional sample of the letter, and started selling subscriptions.
Actually, Carter's crude oil regulations not only made money for PennWell, but also delivered the company a new source of revenue. Most CEL readers were lawyers or lobbyists, so they were not typical OGJ subscribers.
Eventually, the CEL bubble burst. Ronald Reagan, one of the best presidents the oil industry ever had, ended CEL's run when he deregulated crude oil prices. He wiped out the regulations shortly after taking office-and CEL bit the dust within weeks of his inauguration.
Bush challenges
But back to our new president. He is going to face extreme pressure from those who have been the darlings of the Clinton administration. You can bet the farm that the environmentalists will scream long and loud if the Bush administration moves to open acreage on the Arctic National Wildlife Refuge Coastal Plain. And the administration's ties to "Big Oil" will get plenty of media exposure as oil and gas supplies tighten and prices stay high.
All of us can help Bush and Cheney by showing proper behavior when asked about why prices are going up and why we need to drill in areas now protected. Those consuming-state congressmen will pounce on any miscue the industry makes, so make their jobs more difficult by giving them little, if anything, to attack. Don't be like the independent a few years back that showed up for a network television interview in his Mercedes. Drive your pickup. President Bush will have an easier time talking about an oilman in a pickup than one in a Mercedes.
