Thursday, July 26, 2007

Clash of the Titans

I live in New York State's Capital District, in other words, the metropolitan Albany area. Despite local leaders hell-bent on making the place over as "Tech Valley" (trumpets, please), the business here is mostly government business. I have lived here for nearly five years and in that time have come to realize why our state legislature has been described as the most dysfunctional in the entire nation. Honestly, it often appears to be run like a banana republic, regardless of who is sitting in the Governor's Mansion. You see, there's the governor (right now, Eliot Spitzer, defender of truth and rich kid from Manhattan), Speaker of the State Assembly Sheldon Silver (defender of parts of Manhattan and keeper of the flame for the heavily Democratic Assembly) and, last but not least, Senate Majority Leader Joe Bruno (defender of Saratoga's rich folk, self-made businessman and cheerleader for the heavily Republican State Senate).

In the recent past, state government was run by the triumvirate of Silver, Bruno and former governor George Pataki. Much was made of the fact that the elected members of the legislature never did much in the way of the people's business because the Holy Trinity would occasionally gather behind closed doors to--what--paint each other's toenails? No, in reality, they would hammer our deals that made each other look good, except when they didn't, which was much of the time. Shelly Silver, like his Republican counterpart in the Senate, will not be moved on issues he doesn't like or endorse. So New York State continues to have a business climate that scares away the kinds of corporations we'd like to see here and a tax burden that keeps sane people running for the nearest exit (read, state line).

Enter new governor Eliot Spitzer, the brash Democrat who made his reputation slaying corporate dragons on Wall Street as attorney general. He's considered forthright, moralizing and doesn't spurn the oft-used moniker "Steamroller." He was elected by a wide margin on a platform of campaign reform and good government. However, he is now embroiled in a scandal that threatens to derail his bold agenda before his first year is even up.

Without going into too much detail, a few Spitzer aides were discovered to be monitoring the coming and goings of the senate president as he conducted what could loosely be described as "state business," but which also included much fund-raising. Bruno likes to use state helicopters and state police escorts when he, for example, makes forays downstate. Apparently, he's above requisitioning a state vehicle for a leisurely drive down I-87 to New York City. According to the New York Times, many of these trips were heavy on politicking and rather light on legislative activity. As I understand it from reading articles in the Albany Times-Union and the Times, Spitzer's chief media adviser and two others made liberal use of their clout to investigate and log Bruno's many trips earlier in the year. (At the same time, Bruno is being investigated by the F.B.I. for some suspect business dealings, but that's another can of worms.)

Bruno and his sympathizers, having gotten wind of the Spitzer probe, are now threatening investigations of their own. Spitzer, suddenly in the midst of a political scandal that may or may not be of his own making (what did he know and when did he know it?), has been mostly forthcoming with the media this week, saying he's disturbed by the news reports and has suspended, or otherwise removed, the three aides. One of them, Darren Dopp, the governor's chief media architect, has prevaricated on the reasons he initiated the Bruno probe.

But I am fascinated most by the protestations of Mr. Bruno. While it is true that a lightning-quick investigation by Attorney General Andrew Cuomo found the Spitzer team in the wrong, what many at the Capitol are glossing over is that Cuomo's office didn't let Bruno off entirely. Cuomo's report stated that Bruno had done nothing illegal in using state transportation and state police escorts for what were largely political activities, but also mentioned--and this is what's being lost--that simply because what Bruno does is not yet "illegal" doesn't mean it's ethical.

So here we have a preening, sanctimonious senate president chiding the governor and holding self-congratulatory news conferences to lambaste the new administration. Joe Bruno feigns horror and disgust at every opportunity. Yet he doesn't for a moment see anything wrong with the way he abuses his office for his own financial and political gain. Right now he's enjoying a public game of "shoot the messenger." Something tells me, though, his smug act won't play long in Albany. Just give it time.

Friday, July 20, 2007

Food for Thought

I saw on the network news tonight how the cost of food is soaring. Frankly, I can't recall the price of anything we eat ever dropping. Milk at nearly $5 a gallon? Bread up 14%? I know beef is at ridiculous highs. I guess we can thank the members of Congress from the corn states, right? After all, they are the ones who pushed the use of corn for making ethanol. All those fancy environmental excuses for essentially giving a windfall to their constituent farmers. Now, I am all for helping the nation's farmers, but didn't anyone on Capitol Hill see that in making corn the basis for our new biofuel initiative that we would boost the price of the commodity at the center of that initiative? The price of corn today is up a whopping 52% a bushel! That's why the cost of everything we eat is going up. Virtually everything on supermarket shelves has a corn or corn syrup component. It's utter stupidity on the part of our elected officials in Washington to assume that pushing ethanol use was going to help us.

There's a corollary issue here that hasn't been addressed anywhere that I can see. Let's assume that we can somehow stabilize corn prices. I am wondering what happens when the biofuel initiative meets global warming. What happens when an entire season's corn harvest is wiped out by an historic summer of record heat? What happens when ethanol producers have to punt because they can't get the corn they need? Or, even more to the point, if the corn output is threatened by forces of nature, who gets to decide where the supplies go? If yields are down, is what's left equally shared by energy and food producers? Or does one industry automatically have priority over the other? Maybe I am being naive. Maybe this is being discussed at the highest levels of government or, at the very least, in the corridors of the Agriculture Department. Frankly, given how poorly our federal government anticipates any calamity (Katrina anyone?), I don't think anyone in Washington knows or cares.

Thursday, July 19, 2007

Big Oil, Bigger Lies

Okay, here goes. For quite a few years I have studied the oil market, mostly as a professional journalist, but also out of basic curiosity. I'm old enough to remember when you could get a gallon of regular for just 75 cents. I am sure it was leaded gas, but no matter. The process was the same: oil was imported, refined into gasoline and distributed at gas stations, excuse me, "service stations," where you got your windshield washed and your tires checked as part of your purchase. And maybe for few cents more, you could buy drinking glasses or a picnic cooler. The point is, you got a lot for just 75 cents. Now we are paying about three bucks a gallon and we have to do the rest on our own (unless you live in New Jersey or Oregon).

I check the business section daily for the big papers and watch to see how the industry spins the fact that, despite strong inventories, and no real worldwide oil shortage, we still pay inflated prices for gasoline. I am sure some analysts are right that we face a "future" shortage, but somehow the idea of a potential problem always rules what we currently have to pay. Add to that the myriad complaints of political unrest in the oil-producing countries, the accidents and shutdowns at domestic refineries, and the pervasive intrusion of greedy (yes, greedy) and deep-pocketed speculators in the futures market and we have the perfect storm for a continued and artifically-supported increase in retail gas prices.

I remember a few years ago I worked at a TV station in San Luis Obispo and was doing a series of stories about the run-up in gas prices. I can't recall exactly, but maybe the price then was hovering at $1.50 a gallon. What astonished me at the time was that nine separate refineries in California had shut down due to accidents, and seemingly all at once. It seemed impossible that this series of accidents was anything but orchestrated. Consider, too, that California gasoline retailers are required by law to sell a specially-formulated form of auto fuel that can't be produced anywhere but in the Golden State and in Puerto Rico. It has to do with additives and environmental restrictions. Otherwise, California retailers could easily have imported gasoline from anywhere else. Anyway, we drivers were fucked.

I talked with industry reps, retailers and wholesalers and heard the same story over and over. It was just "market conditions" and an unfortunate set of circumstances that so many of the state's refineries were off-line. Mere coincidence. Then one day, I happened to meet a guy who had retired from "the oil patch," as he called it. He had worked for a local refinery. I told him about my conversations regarding the price of gasoline and he just laughed. He told me it was routine, for his company at least, to deliberately allow equipment to malfunction so that the refinery could be pulled off-line. He said he would alert his supervisor to existing, or coming, problems, and the supervisor would just wink and send him on his way. The fact that nine refineries were off-line at precisely the same time was no big surprise to this guy. He said the dirty secret in the industry was that it was a favorite way for the big oil companies to manipulate the market and, hence, prices at the pump.

At still another time, I was told by someone who professed to know that the big oil companies routinely kept oil tankers at sea when gas prices started falling. Of course, this was in the years before the Middle East had become so volatile. I am sure there are experts who will refute these stories as myths and falsehoods. All I can offer is what I have heard. But I am angry that when the major network news organizations do stories about the high price we pay for gas, they always parrot industry excuses as gospel. In the average story, you get upset motorists at the pump, a few angry soundbites, and then a response from some industry flack who says big oil's hands are tied by current market conditions.

Maybe we will never learn the truth. It certainly won't happen as long as the Bushies run things. And maybe the situation won't change even when a Democrat is sitting in the Oval Office. I pray for the day when some courageous journalist (and not likely someone working for the NYT or WSJ) finally blows the whistle and tells the world how we have been lied to all these years. You think Enron was big? Just wait until the curtain is pulled back on Big Oil.