Jeff Madrick: The US in Peril?

(Courtesy of Dale Fitzgibbons)

The US in Peril?
By Jeff Madrick
The New York Review of Books

A Review of:

American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century
by Kevin Phillips
Viking, 462 pp.

1.

In the early 1970s, the United States imported approximately one third of the oil it consumed. Today, it imports almost 60 percent and by 2025, so the Energy Department forecasts, the US will probably have to import 65 percent of its oil. Meanwhile, worldwide demand for energy will rise rapidly, especially as China and India increase their consumption, keeping up the prices American consumers and businesses pay for gasoline, home heating oil, kerosene, and jet fuel, as well as other petroleum products crucial for industries like plastics and pharmaceuticals.

But until recently—when rising gasoline prices have forced Bush to talk of conservation—the Bush administration's domestic energy policy has emphasized a proposal that will hardly ameliorate the nation's energy dependency.[1] For five years, it has strenuously sought to open the Arctic National Wildlife Refuge in Alaska to private petroleum exploration. Even if successful, however, Alaskan drilling would reduce the nation's oil imports modestly at best from 65 percent of its needs in 2025 to 61 or 62 percent and, in doing so, damage a valuable natural environment.[2] So far, Congress has not granted the administration its wish.

In Kevin Phillips's view, the Bush energy policy is a prime example of America's failure to confront its most difficult challenges. Phillips, once a member of the Nixon administration, has written a timely book that argues that America is very different from the independent and omnipotent nation portrayed by President Bush and his administration. Dependency on oil is one of three major tendencies that will seriously undermine America's future, he writes, the other two being the influence of radical religion and the growing reliance on debt to support the economy. For Phillips, these constitute "the three major perils to the United States of the twenty-first century," and he offers little hope that the US will avoid the consequences. Since he wrote his widely read The Emerging Republican Majority in 1969, Phillips has published several books lamenting how poorly the Republicans have handled their responsibilities. American Theocracy is his most pessimistic work to date.

Phillips is concerned with problems that all nations have to contend with in one form or other as they grow older. The very sources of national success, whether in resources or industrial innovation, eventually reach their limits; what lasts is a structure of power and influence that inhibits reform. But by limiting the scope of his book to oil, religion, and debt—although they can be connected with practically every other issue—Phillips has only partially described what is wrong with the US. Moreover, in this new book clear analy-sis is too often displaced by sermonizing to the effect that America is in ineluctable decline.

Phillips's three major threats to the nation are well chosen, and he presents much information about them; but he could usefully have considered other perils to the US as well. The rising cost of health care, for example, is as grave a concern as the three issues on which he concentrates. Unless that system is radically reformed the US will face a future in which growing numbers of people will not receive adequate treatment. The cost of education is on a similar trajectory, as the chances of getting even a minimal education in the poorer neighborhoods become smaller. Similarly urgent are the failures of the economy. Despite rapid increases in productivity, which is historically the source of a rising standard of living, family incomes are not growing. In fact, after the five recent years of economic expansion, median family income is roughly what it was in 1999, even though wages at last rose early this year.

In foreign affairs, one could argue that oil dependency and born-again religion have much influence over this administration's unfortunate policies. But they cannot alone account for its advocacy of preemptive war and its concerted efforts to update, improve, and build new weapons, including nuclear weapons, for conventional warfare. Bush's assertion of presidential authority to ignore Congress and authorize wiretapping, torture, and illegal detentions threatens the principles on which America's republican democracy is based. Phillips does not give these threats the attention they deserve.



Still, the damage being done by the administration's irresponsible energy policies, more evident by the day, is an appropriate place to begin a book on American ills. Despite its having reduced the use of oil over the past thirty years as a percentage of the nation's income, America is still by far the world's largest user of oil, consuming 25 percent of the world's daily production. Most of this is for transportation. Of the 520 million cars in the world, 200 million are driven in America, while the US makes up only 5 percent of the world's population. It also has only 3 percent of the world's petroleum reserves, meaning growing imports are a certainty. Domestic production has been falling for decades.

Drawing on previous history, Phillips argues that the price of oil, now more than $70 a barrel, could go higher than $100 a barrel as worldwide reserves begin to decline. If his predictions come true, this could drive fuel and gasoline prices to levels that could seriously slow down the American economy. At more than $3.00 a gallon today, gasoline prices may soon start restraining economic growth. But long-term forecasting of oil prices has usually been unreliable and overly pessimistic. Of greater concern than dwindling reserves is the increasing demand for energy by newly expanding economies, notably China and India. Prices are now more than double what they were two years ago, and are likely to stay relatively high as long as the world economy grows. In addition, access to oil production is increasingly threatened by both political and natural events.

The biggest exporters of oil to the US are Canada and Mexico. But the fourth largest, Nigeria, may be on the brink of a civil war that could threaten production. Venezuela, another major oil exporter, is increasingly antagonistic to the US and American oil companies. Bolivia recently announced plans to nationalize foreign-owned natural gas companies. The US imports about 17 percent of its oil from the Middle East, a proportion that will rise. When Iran first threatened to cut off exports to the US during the currentdispute over its nuclear program, oil prices jumped and have only risen further as tensions increase. Russia, a major producer, has been using its oil and natural gas reserves as a political weapon, threatening to shut down flows of oil and natural gas to the rest of Europe if it doesn't get its way. Gasoline prices also rose to $3.00 a gallon, if only temporarily, after Hurricane Katrina devastated refining facilities in the Gulf last summer.

A serious energy policy providing for security, diversity of sources, and, most important, conservation is necessary. But as Phillips shows in detail, such a policy is stymied by a US administration that is highly sympathetic to the powerful oil companies that would rather promote further exploration than reduce oil use. It is also an administration that does not want to ask Americans to make sacrifices. This was a political lesson learned from the Reagan administration, which successfully portrayed President Carter as a weak and confused pessimist because he called attention to the limits of natural resources. "The glory of the twentieth century is now the burden," writes Phillips somewhat rhetorically.

Oil has soaked deeply—in all likelihood indelibly—into the politics and power structure of the United States, partly because over two bountiful centuries it has also seeped, spouted, and oozed up from so many sections of so many states. More than a fuel, oil became a heritage and also the basis of a lifestyle.

Oil was first produced in volume in Ohio, Pennsylvania, and West Virginia, and later Louisiana, Texas, Oklahoma, and California. Oil companies and auto companies were among America's largest throughout much of the twentieth century, and Rockefellers, Fords, and Dodges were among the nation's richest people. As late as 1982, as Phillips observes, the fortunes of half of the top thirty of those on the Forbesmagazine list of the 400 richest Americans originated in petroleum. It is also to be expected that a huge nation with tens of millions of drivers will demand low gas prices. As Phillips shows, the high excise taxes of the kind levied in Europe to conserve oil have always been resisted in America, particularly by the auto industry and its powerful allies.

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