By: Mary Mostert, Analyst, Original Sources, (www.originalsources.com)
October 17, 2000
As of this writing, the polls are showing George W. Bush is slightly ahead of Al Gore this week, as the public considers the cost of heating their homes this winter, and the Middle East teeters on the edge of war. Understandably, Bill Clinton went over to a meeting in Egypt desperately trying to patch things back together in time for the election, which is only three weeks away.
Early this morning, he announced his October surprise which, undoubtedly, he believes will get Al Gore elected.
When Clinton flew to Egypt, 7-10% of the voters still have not decided who they will vote for, depending on which poll you read. At this point it appears that the rosy economy, which Clinton and Gore have taken the credit for, is not looking quite so rosy with the Dow reacting to $37 per barrel oil - almost four times the cost of oil a year ago.
Higher oil prices will be reflected in November 1st bills for the month of October and those bills are apt to be more than double what they were last November. And, if the turmoil in the Middle East continues or gets worse, the OPEC nations could very well make it worse in an effort to bring Clinton to heel over Israel. It was the price of oil that cost Jimmy Carter a second term and it could very well be the issue that costs Al Gore a first term. On the other hand, if the gas and oil situation can be modified in the next three weeks, at least enough to convince the voters all is well, Al Gore could win the White House on November 7th.
However, while Gore has tried desperately to convince the American people that somehow or other George W. Bush, a former oilman, is responsible for rising oil prices, it has not convinced most Americans. Indeed, there are many voters who seem to be leading towards George Bush and Dick Cheney for a very practical reason. If the problem is not enough oil, maybe having some people who know something about the subject in the White House would make sense. And, both of them are pointing out that, during Clinton-Gore's nearly eight years in office, 33 refineries in America have closed down, all the rest of them are working at almost 100% capacity and the percentage of dependency on foreign oil has dramatically risen, as Gore led the fight to stop oil production in Alaska and off-shore.
So, at this point, with snow already showing up weeks early on the mountain tops of the West, we have heating oil that at this writing is selling wholesale at $1.0161 a gallon on the New York Mercantile Exchange, compared with .5961 cents a year ago. And, the winter hasn't actually begun. Traditionally, the price of heating oil increases over the winter, meaning the $1 a gallon heating oil today could very well double by January or February.
In spite of those facts, the New York Times today has a hopeful article that claims the heating fuel shortfall in the Northeast may not be:
"as dire as earlier feared. A large number of homeowners and businesses, worried that oil prices would continue to increase, appear to have stocked up earlier than in past years. And many utilities and businesses in New York and New Jersey are for the first time required to build at least a seven-day supply of heating oil before winter. As a result, there appears to be more heating oil in reserve than the official figures show, industry experts say."For some time, supplies of crude oil have been rising, and refineries in the United States have been running nearly flat-out. Yet the price of heating oil has climbed to lofty heights, largely because the officially reported volumes in storage that serve as a buffer against events like an early cold snap or a pipeline explosion remained so low. That set off alarms among policy makers and led to a White House decision to release oil from the Strategic Petroleum Reserve to help bolster supplies."
"Where has the heating oil been going? A lot more than usual at this time of year is probably already in the tanks of thousands of homeowners and in the storage sites of heating oil dealers and businesses whose stockpiles fall below the radar of the weekly statistics, according to many industry officials.
"'The news stories have alerted people to the problem of high prices and low supplies, and they're filling their tanks,' said John Kilduff, senior vice president for risk management at Fimat, the commodities trading unit of Société Générale. 'A lot of oil may be working its way into storage that goes unmeasured.'"
There are a lot of maybes and probablys in that report. The fact is, refineries are working at capacity, because so much of their competition has been closed down in the last eight years due to Clinton-Gore environmental pressures. As Americans discover that the cost of heating their homes this winter and the cost of transportation to their jobs has doubled, they are not going to be happy and are not apt to listen sympathetically to those who tell them that it's good for the environment.
And, the N.Y. Times optimism notwithstanding, if we are unable to refine sufficient gasoline and heating oil to meet the rising needs of winter during the month of October, what's going to happen when it REALLY gets cold in the Northeast? I used to live in the Northeast. Generally speaking heating oil tanks are filled once or twice a month for most people. Few have tanks large enough to buy enough oil to last several months. Just because many people are filling their tanks ahead of schedule is not really going to help a whole lot, especially if it turns out to be a cold winter.
Further complicating the issue is the attitude in the Middle East towards Israel and its friends. I have seen no reports in the American media on the subject, but there are widespread threats of war with Israel among Arab nations. The Middle East Times, which is published in Egypt, reports today :
"Mubarak's first initiative to help end the fighting in Israel and Palestine was to invite Israel's prime minister, Ehud Barak, and Palestine Authority president, Yasser Arafat, to join him and US Secretary of State Madeleine Albright for talks at Sharm El Sheikh. However, previous talks in Paris failed to provide a basis for an Egyptian-lead summit and Barak said he would not attend."The Arabic daily Al Ahrar reported that the summit would be held October 21-22, and that Mubarak had said that differences between the Arab states could be discussed on the sidelines of the meeting. "Mubarak went on to say that '99 percent of Arab leaders' had agreed to attend the meeting. Moammar Qadhafi of Libya had at first called for a boycott against Israel and then a declaration of war, but had later agreed to attend the summit. The notable exceptions so far are the leaders of Somalia and Mauratania.
"Egyptian Foreign Minister Amr Moussa has announced that summit participants will be able to discuss the issue freely and adopt whatever resolutions they think appropriate."
As we go into winter, depending far more heavily on oil from the Middle East to heat our homes and to get to work than we were when Clinton and Gore came to office, we are facing what could very well be a major threat to America's economic prosperity as well as a very real threat to a major Middle Eastern Ally, Israel. Also, there are indicators that, to preserve the needed oil from Arab nations, Clinton may well turn his back on Israel in order to assure heating oil this winter.
At this writing, thousands of Palestinians, some chanting for militants to bomb Tel Aviv, have taken to the streets of West Bank towns in similar marches on the 16th straight day of violence that had torpedoed Israeli-Arab peacemaking.
In Gaza City, an Islamist crowd rampaged past Palestinian police and set fire to a hotel, shops and the home of a Christian which they said sold or contained alcohol, witnesses said. The buildings were damaged but not destroyed.
However, early this morning an agreement was announced at the Egyptian Red Sea resort of Sharm El-Sheik which is supposed to "end current violence" in Israel. The agreement calls for both sides to end violence and to take "concrete measures to maintain calm. The United States will "develop a committee of fact finders" which will include President Clinton and Secretary General Kofi Annan. All this is supposed to end the violence in Israel "in the next two weeks." Just in time for the election.
In effect, the "agreement" is an agreement to seek a cease fire. It's not peace, but it does put Bill Clinton on the front pages as a "peacemaker."
Undoubtedly the agreement, and the timing of it, is designed to make the Clinton-Gore administration look so good to you that you won't mind paying double or three times the money to put gas in your car and to heat your home as you did last winter.
You really have to hand it to Bill Clinton. He's got a keen sense of timing. The question is, will the American people be so pleased that they don't notice what they are paying at the gas pump and for heating oil between now and the election?
To comment: mmostert@originalsources.com
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