Texas’ Biz is America’s Biz

The more things change, the more they don’t. The very first issue of The Texas Observer broke a story which, given the details, might have occurred just last week.

The December 13, 1954 issue carried a story about how Gov. Allan Shivers, Lieutenant Governor Ben Ramsey, and almost half of the members of the Texas Senate were availing themselves of a duck hunt and a cruise aboard a yacht in East Texas—all of which was gladly paid for by businesses with operations in the Port Arthur area, including Texaco, Pure Oil Co., and Gulf Oil. The yacht belonged to Texaco. When asked about the motivation for the event, a Port Arthur businessman told the Observer, “They’ll have lots of fun out of it.”

A half century has passed since Ronnie Dugger put out the first issue of his weekly broadsheet—from a single large room at 504 W. 24th St., just a few blocks west of the University of Texas campus—and Texas politics and the Texas energy business are still inextricably intertwined. Indeed, despite many changes, Texas remains much the same in two important areas: the state’s energy barons are still supporting reactionary, fear-mongering politicians; and when it comes down to what really drives the state and its politics, it’s still all about the oil.

In 1954, Dallas oilman H.L. Hunt was a leading supporter of the anti-Communist zealot, Senator Joe McCarthy. Hunt was a racist, anti-Catholic, and anti-Semite. He was also a bigamist and a Puritan. During the ’50s, Hunt was one of America’s richest men and he poured vast amounts of money into McCarthy’s witch hunt and into conservative media outlets like Facts Forum, which ran radio and TV shows that fervently espoused McCarthy’s claim that America was being overrun by Communists. Hunt and fellow Dallas oilman, Clint Murchison, were early members of the John Birch Society, an ultra-conservative group of anti-Communist crusaders. Hunt, Murchison, and Houston oil baron Hugh Roy Cullen were huge donors to McCarthy, a man who got so much money from Texas that he became known as the state’s “third senator.”

Fast forward 50 years to the Swift Boat Veterans for Truth, the Houston-based group that repeatedly smeared John Kerry’s reputation and his war record in Vietnam during the campaign. When the group filed its disclosure form with the Federal Election Commission, it was revealed that its biggest funders included Dallas energy baron T. Boone Pickens. Pickens gave the group $500,000. The group got $100,000 from Albert Huddleston, a Dallas oilman who married into the Hunt family.

If not for the Texas energy business, neither George H. W. Bush, whose political career was clearly centrist, nor his son, George W. Bush, whose foreign policy and domestic agenda can truthfully be described as extremist, would have ever been elected to public office. Until just a few months ago, the younger Bush’s biggest career patron was Enron. While he was governor, more of Bush’s biggest donors came from the energy business than any other sector. Those donors allowed Bush to become a viable candidate for the White House. Once in that job, Bush’s reactionary policies—preemptive war in Iraq, massive tax cuts for the wealthy, and restriction of individual liberties, to name a few—have made him into the modern equivalent of McCarthy: a politician whose primary message to the electorate can be summed up as “be afraid.” Of course, terrorism and Osama bin Laden have replaced the dreaded Communists, but the rhetoric is remarkably similar.

While the Texas energy industry has pushed its candidates, it has also pushed its national agenda. The second issue of the Observer, December 20, 1954, carried a story with the headline “Texas Oilmen to Seek Tariff Against Imports.” It explained that Texas oil producers were lobbying Congress to tax imported oil because if the U.S. allowed too much foreign oil in, it would hurt Texas producers and therefore affect “the security and economy of the nation.” They got the import limit passed in 1959, and it stayed in effect until the mid-1970s.

The import limit gave even more power to the Texas Railroad Commission, which controlled the supply of oil flowing out of Texas oil wells. By determining supply, it had de facto control over price. Today, the Railroad Commission has been supplanted by the Organization of the Petroleum Exporting Countries with regard to supply. But Texas remains the center of the world energy trade. Nine of the 20 biggest Texas-based corporations are energy companies. In 1954, Texas was the main supplier of oil to America. The same holds true today. Texas companies produce, refine, and distribute more oil, natural gas, gasoline, jet fuel, refined products, and chemicals than any other state. All of the major domestic integrated and independent oil companies—ExxonMobil, ConocoPhillips, ChevronTexaco Corp., Marathon Oil Corporation, Apache Corporation, and Anadarko Petroleum Corporation—are either headquartered in Dallas or Houston or have major operations in those cities. All of the 10 biggest oilfield services companies in America are based in Houston. In 2002, those 10 firms had revenues of $35.2 billion and had operations in over 100 countries around the globe.

Fifty years ago, Texas energy companies were arguing that the “security and economy of the nation” depended on them. Little has changed. Oil is still the world’s most important commodity. And Texas energy companies continue to dominate the industry and make enormous profits. In 2003, Irving-based ExxonMobil, the world’s biggest oil company, had record profits of $17 billion. Those huge profits will continue. A barrel of oil on the spot market now sells for about $55. As oil becomes more scarce and Third World economies like those of China and India demand even more energy, prices will continue upward, and the oil giants will further tighten their grip on the market.

But here’s the rub: As these Texas energy companies continue to expand into oil-rich countries—particularly in Muslim countries, where George W. Bush has created so much anti-American sentiment—they will need the backing of the U.S. military. The plain truth is that America’s imperial reach around the world is due largely to its insatiable thirst for oil. And the Pentagon’s main task in the Persian Gulf, the Mediterranean, the Strait of Malacca, and elsewhere is to make sure that the flow of world oil is not interrupted. Depending on whose figures you believe, up to one third of the Pentagon’s annual budget is now being spent for the sole purpose of protecting strategic oil supplies and choke points like the Strait of Hormuz in the Persian Gulf.

The duck hunting trip that Shivers, Ramsey, and the senators took in East Texas showed how the energy business drove the state’s politics in the 1950s. Back then, the oil companies wanted to keep imported oil out. Today, those same Texas energy interests are doing all they can to get imported oil (and natural gas) into the U.S. And that need for imported energy is driving America’s politics and America’s foreign policy. Over the past half-century, Texas has exported vast amounts of oil and a bunch of politicians. Those exports have had a clear result: Texas’ business has become America’s business. And while that trend has been inexorable, it’s not at all clear that it will be good for America over the long term.

Observer contributing writer Robert Bryce is the author most recently of Cronies: Oil, the Bushes, and the Rise of Texas, America’s Superstate (PublicAffairs).