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Sup­ple­ment­ing FTR 280, this pro­gram high­lights the cyn­i­cal, con­spir­a­to­r­ial machi­na­tions of major energy com­pa­nies, the Bush admin­is­tra­tion and the Cal­i­for­nia Repub­li­can estab­lish­ment in effect­ing California’s “energy cri­sis” of 2000–2001. High­light­ing the inter­play of Bush crony Ken Lay’s now dis­graced Enron firm, an advi­sory task force headed up by Bush asso­ciate James Baker and the Bush admin­is­tra­tion energy com­mis­sion headed by Dick Cheney, the pro­gram accesses a very impor­tant paper authored by Kather­ine Yurica. Be sure to check out this work at her web site. There are strong indi­ca­tions that California’s “energy cri­sis” was delib­er­ately engi­neered in order to under­mine Demo­c­ra­tic gov­er­nor Gray Davis, enrich the energy indus­try, and pro­vide the ratio­nale for the Bush administration’s for­eign policy.

Pro­gram High­lights Include: For­mer gov­er­nor Pete Wilson’s chair­man­ship of Arnold Schwarzenegger’s cam­paign; a very sus­pi­cious (prob­a­ble) test of the Cal­i­for­nia electricity-brokering infra­struc­ture; the Baker advi­sory group’s cit­ing of the Cal­i­for­nia “cri­sis” as the basis for domes­tic and for­eign pol­icy rec­om­men­da­tions; the Cheney group’s sus­pi­cious cit­ing of the Cal­i­for­nia energy cri­sis; highly sus­pi­cious and con­tra­dic­tory word­ing of the “National Energy Pol­icy” drawn up by the Cheney com­mis­sion; the Project for a New Amer­i­can Century’s dis­cus­sion of the poten­tial use­ful­ness of “a new Pearl Har­bor”; the desta­bi­liza­tion of Jimmy Carter’s pres­i­dency by the oil indus­try, George H.W. Bush’s CIA and the Saudis.

1. A major con­tribut­ing fac­tor to incum­bent gov­er­nor Gray Davis’ unpop­u­lar­ity is the enor­mous increase in elec­tric­ity prices due to the dereg­u­la­tion leg­is­la­tion effected by for­mer gov­er­nor Pete Wil­son. Wil­son is “out­sider” Arnold Schwarzenegger’s cam­paign man­ager, giv­ing the lie to Schwarzenegger’s claim that he will kick the spe­cial inter­ests out of Sacra­mento. He is, in fact, a tool of those very same spe­cial interests.

“Admon­ished by his advis­ers not to make news out of the box, Mr. Schwarzeneg­ger left his cam­paign chair­man, Pete Wil­son, the for­mer Cal­i­for­nia gov­er­nor, to attack Mr. Davis as an incom­pe­tent spend­thrift, and lesser polit­i­cal min­ions to explain his per­sonal finances to a press corps demand­ing details, any details.”

(“In Full Field, It’s All About Schwarzeneg­ger” by Char­lie LeDuff and Alan Feuer; The New York Times; 8/11/2003;.)

2. Bush’s Sven­gali Karl Rove was appar­ently among those who helped to anoint Schwarzeneg­ger as the stan­dard bearer for California.

“. . . From what we’ve heard, the Repub­li­can hierarchy—especially those close to for­mer Gov. Pete Wilson—would favor Schwarzeneg­ger. At least that’s the word that came out of the Bohemian Grove this past week­end, where a num­ber of state and national GOP­ers, includ­ing pres­i­den­tial adviser Karl Rove, hap­pened to have gath­ered at a club getaway . . .”

(“Matier & Ross: Schwarzeneg­ger to Decide”; San Fran­cisco Chron­i­cle; 7/23/2003; p. A21.)

3. Begin­ning the dis­cus­sion of the delib­er­ate manip­u­la­tion of California’s dereg­u­lated elec­tric­ity mar­ket, the pro­gram chron­i­cles a star­tling fluc­tu­a­tion of rates in 1998. The author of this impor­tant, inci­sive arti­cle observes that this was appar­ently a test of the “power lift­ing” that desta­bi­lized Davis and boosted Schwarzeneg­ger in a posi­tion to move to Sacra­mento. “This story begins with the Cal­i­for­nia energy cri­sis, which started in 2000 and con­tin­ued through the early months of 2001, when elec­tric­ity prices spiked to their high­est lev­els. Prices went from $12 per megawatt hour in 1998 to $2000 in Decem­ber 2000 to $250 in Jan­u­ary 2001, and at times a megawatt cost $1,000.” (“Fraud Traced to the White House: How California’s Energy Scam Was Inex­tri­ca­bly Linked to a War” by Kather­ine Yurica; The Yurica Report; p. 1; avail­able online at www.yuricareport.com/PoliticalAnalysis/FraudinWhiteHouse.htm .)

4.

“One event occurred ear­lier. On July 13, 1998, employ­ees of one of the two power-marketing cen­ters in Cal­i­for­nia watched incred­u­lously as the whole­sale price of 41 a megawatt hour spiked to $9,999, stayed at that price for four hours, then dropped to a penny. Some­one was test­ing the sys­tem to find the lim­its of mar­ket exploita­tion. This inci­dent was the ear­li­est indi­ca­tion that the peo­ple and the state could become vic­tims of fraud. The Sacra­mento Bee broke the story three years later, on May 6, 2001. Today, Cal­i­for­ni­ans are still pay­ing the costs of the deba­cle while accord­ing to state offi­cials the power com­pa­nies who manip­u­lated the energy mar­kets reaped more than $7.5 bil­lion in unfair profits.”

(Idem.)

5. California’s “energy cri­sis” appar­ently served as a foun­da­tion for dis­graced Enron chair­man Ken­neth Lay’s piv­otal rec­om­men­da­tions to Vice-President Dick Cheney’s energy pol­icy task force.

“In April of 2001, Ken Lay handed Dick Cheney a two-page mem­o­ran­dum rec­om­mend­ing national energy pol­icy changes. The memo con­tained Enron’s posi­tions on spe­cific, rather tech­ni­cal issues, which were pre­sented as a ‘fix’ for the Cal­i­for­nia cri­sis. (Enron brazenly advised the admin­is­tra­tion not to place price caps on energy, which would be pre­cisely the request Cal­i­for­nia offi­cials made to the pres­i­dent, and which the Pres­i­dent and the Vice Pres­i­dent would just as brazenly deny until pub­lic pres­sure forced them to capitulate.)”

(Ibid.; p. 2.)

6. For­mer Bush (Senior) sec­re­tary of state James Baker presided over an advi­sory report that also appears to have been cen­tral to Cheney’s energy directives.

“On Octo­ber 6, 2002, a news­pa­per in the UK pub­lished a lit­tle known arti­cle about Mr. Cheney’s advis­ers. Accord­ing to Neil MacKay, an award-winning jour­nal­ist, writ­ing for Scotland’s Sun­day Her­ald, Dick Cheney com­mis­sioned an energy report from ex-Secretary of State James Baker III. The time of this ‘com­mis­sion’ is not reported, but since the mem­bers of the appointed task force held three video­con­fer­ences and tele­con­fer­ences in Decem­ber, Jan­u­ary, and Feb­ru­ary 2000–2001, Cheney there­fore log­i­cally con­tacted Baker some time prior to the Decem­ber 2000 meeting—during the pres­i­den­tial tran­si­tion period.”

(Ibid.; p. 3.)

7. Baker’s law firm is the legal coun­sel for the Bin Laden-connected Car­lyle Group. In addi­tion, the firm is rep­re­sent­ing Saudi Prince Sul­tan in a trillion-dollar suit filed by the sur­vivors of the vic­tims of 9/11.

“James Baker was uniquely sit­u­ated to ful­fill Cheney’s com­mis­sion, for among the many hats he wears, he is legal coun­sel to the Car­lyle Group, one of the nation’s largest defense invest­ment firms whose board con­sists of for­mer high level gov­ern­ment offi­cials, includ­ing George Bush, Sr. Baker was also the ‘hired gun’ for George W. Bush’s cam­paign in Florida, along with Karl Rove. But among the hats he wears, none is more valu­able than his abil­ity to become invis­i­ble and leave no fin­ger­prints behind. James Baker courts the press and is hailed a states­man; he also serves as the hon­orary chair­man of the James Baker III Insti­tute for Pub­lic Pol­icy at Rice Uni­ver­sity, a think tank that was involved in aid­ing the George W. Bush pres­i­den­tial tran­si­tion teams.”

(Idem.)

8.

“Equally intrigu­ing is the fact that Baker has ties with both the Bushes and Ken Lay. Years ear­lier, in 1993, after Baker stepped down from his stint as Sec­re­tary of State, he and Robert A. Mosbacher—Bush senior’s com­merce secretary—signed a joint con­sult­ing and invest­ing agree­ment with Enron. The two men began a lucra­tive career mak­ing joint global invest­ments with Enron on nat­ural gas projects. Baker Botts LLC, James Baker’s law firm, flour­ished in its spe­cialty of inter­na­tional oil and gas counseling.”

(Idem.)

9. Ken Lay was not the only energy-industry high roller to par­tic­i­pate in the Baker task force.

“Since Baker walked in their cir­cles, when he set out to select an energy team to advise the White House, he filled it with lead­ers of the oil, gas, and power indus­tries. Three appointees stand out: Ken­neth Lay from Enron, who was work­ing on the Bush energy Tran­si­tion team under Dick Cheney at the time; Chuck Wat­son, the then Chair­man and CEO of Houston’s Dyn­egy Inc., and Dynegy’s Gen­eral Coun­sel and Sec­re­tary, Ken­neth Ran­dolf. Both firms were deeply involved in ille­gally manip­u­lat­ing the Cal­i­for­nia energy mar­ket at the time and even­tu­ally faced crim­i­nal investigations.”

(Ibid.; pp. 3–4.)

10. The Cal­i­for­nia “energy cri­sis” appears to have played a key part in the rec­om­men­da­tions of the Baker energy advi­sory group.

“The Baker energy task force pro­duced a report titled, Strate­gic Energy Pol­icy Chal­lenges for the 21st Cen­tury, dated April 2001. There is no mis­tak­ing the fact that rea­son­able, detailed and impor­tant expert advice is meted out to the new pres­i­dent. How­ever, this amaz­ing 107-page report strikes a drum­beat for action that grabs the reader as it pro­pels a pic­ture of a naked, energy-scarce nation, sub­ject to energy short­ages and price fluc­tu­a­tions, across its pages. Con­trast­ing the state of what is, against what should be, and mer­ci­fully mak­ing pow­er­ful rec­om­men­da­tions that will ‘save our econ­omy,’ it offers warn­ings such as: a sharp rise ‘in oil prices pre­ceded every Amer­i­can reces­sion since the late 1940’s.’”

(Ibid.; p. 4.)

11.

“The Cal­i­for­nia energy cri­sis is raised again and again, along with the prophecy that Amer­ica can expect ‘more California-like inci­dents’ in the future. There’s even a con­nec­tion made between the Cal­i­for­nia cri­sis and the Mid­dle East, which accord­ing to the report, ‘will remain the world’s base-load sup­plier and least expen­sive source of oil for the fore­see­able future.’ With that prophetic utter­ance, the stage is now set for a new actor, a new vil­lain, and a new energy policy. . . .”

(Idem.)

12. Although it is not cov­ered in detail in the broad­cast, the Bush energy pol­icy also had pro­found for­eign pol­icy rec­om­men­da­tions, focus­ing on Iraq, among other issues. The broad­cast reviews the dis­turb­ing obser­va­tions about the poten­tial use­ful­ness of “A New Pearl Har­bor” in a paper by the Bush-connected Project for a New Amer­i­can Century.

“‘The his­tory of the 20th Cen­tury should have taught us that it is impor­tant to shape cir­cum­stances before crises emerge and to meet threats before they become dire.’ In fact, on pages 51 and 67 of the institution’s intel­lec­tual cen­ter­piece, Rebuild­ing America’s Defenses, the authors lament that the process of trans­form­ing the mil­i­tary would most likely be a long one, ‘absent some cat­a­strophic and cat­alyz­ing event—like a new Pearl Har­bor.’ (How unfor­tu­nate for Amer­i­cans, they got their needed event on Sep­tem­ber 11, 2001.)”

(Ibid.; p. 5.)

13.

“One of the most strik­ing facts about the national report is that it makes 110 ref­er­ences to California’s energy cri­sis, which was ninety-nine more than the Baker report makes. Clearly, some­one in the White House needed an impres­sive energy cri­sis to tout. How unfor­tu­nate that the cri­sis cited was fraud­u­lently induced. Like the Baker report, the national report states, ‘The Cal­i­for­nia expe­ri­ence demon­strates the crip­pling effect that elec­tric­ity short­ages and black outs can have on a state or region.’ Warn­ings abound: ‘Amer­ica in the year 2001 faces the most seri­ous energy short­age since the oil embar­goes of the 1970’s.’ The 110 rep­e­ti­tions of the word ‘Cal­i­for­nia’ linked with words like ‘energy cri­sis,’ and ‘energy short­ages and price spikes,’ could turn the national energy report into an ad man’s prized primer.”

(Ibid.; p. 6.)

14. Revers­ing direc­tion, the author (s) of one of the pas­sages in the report reveals the he (or she) is aware of the true nature of California’s man­u­fac­tured energy crisis.

“Notwith­stand­ing its impor­tance as an exam­ple of what could hap­pen to other states, the author of a pas­sage (at page 5–12) of the national report sud­denly yields to an impulse to relate what really hap­pened in Cal­i­for­nia. In doing so, he com­pletely con­tra­dicts at least 105 ref­er­ences to Cal­i­for­nia through­out the report. The sig­nif­i­cance of this con­tra­dic­tory entry into the National Energy Pol­icy must not be underestimated.”

(Idem.)

15.

“In the process of revers­ing the care­fully con­strued ‘Cal­i­for­nia expe­ri­ence,’ the author’s grasp exceeds his knowl­edge in that his under­stand­ing of the events in Cal­i­for­nia go beyond what he should have rea­son­ably known at the time of its writ­ing. For he wrote, ‘The risk that the Cal­i­for­nia expe­ri­ence will repeat itself is low, since other states have not mod­eled their retail com­pe­ti­tion plans on California’s plan.’ This is an astound­ing state­ment. If the Cal­i­for­nia cri­sis was caused by a sup­ply short­age as the author claims a line above this sen­tence, surely other states could suf­fer sim­i­lar short­ages. But no, the author is actu­ally mak­ing an admis­sion here: he is admit­ting the energy cri­sis in Cal­i­for­nia can’t be repli­cated in other states because cer­tain mar­ket means do not exist in the other states. How could the author know this? The writer of that sen­tence would have to be some­one inti­mately involved in the Cal­i­for­nia sys­tem; know the real cause of the state’s cri­sis; and be famil­iar with all the other state rules and mar­ket infrastructures.”

(Idem.)

16. Ms. Yurica dis­cusses yet another reveal­ing rever­sal of direc­tion by the author of the report.

“But our knowl­edge­able author is not done. In try­ing to amplify what he just revealed, he tried to hide the true actors in the next sen­tence by mis­di­rect­ing the reader away from the cul­prits to blame the state. This is a for­mula for inco­her­ence. Nonethe­less, the writer’s sen­tence found its way into the national energy report where it spoke for the Bush admin­is­tra­tion: “California’s fail­ure to amend its rules, along with the flawed rules them­selves, some­how had an inde­pen­dent power to ‘drive up whole­sale prices,’ with­out an inter­ven­ing act­ing agent. The only sen­si­ble read­ing left to us is that the flawed rules allowed power bro­kers to manip­u­late the sys­tem. But how could our author and his admin­is­tra­tion edi­tors know this to be true with­out being in col­lu­sion with the wrong­do­ers? If they were not in col­lu­sion they would have reported the crime. But if they remained silent when they had a duty to report or stop the com­mis­sion of a crime, they became accessories.”

(Ibid.; pp. 6–7.)

17.

“Con­tin­u­ing his unex­pected analy­sis, the author tells us, ‘Actions such as forc­ing util­i­ties to pur­chase all their power through volatile spot mar­kets, impos­ing a single-price auc­tion sys­tem, and bar­ring bilat­eral con­tracts all con­tributed to the prob­lems that Cal­i­for­nia now faces.’ This is noth­ing more than the author, and through him the White House, attempt­ing to throw respon­si­bil­ity for any wrong­do­ing by energy com­pa­nies in Cal­i­for­nia squarely at the feet of the state.”

(Ibid.; p. 7.)

18. Philoso­pher George San­tayana stated that, “Those who for­get the past are con­demned to repeat it.” Fore­shad­ow­ing the actions of George W. Bush’s energy-industry cronies in Cal­i­for­nia, the petro­leum indus­try, the Saudis and George H.W. Bush’s CIA helped to desta­bi­lize Jimmy Carter’s Presidency.

“The sources we inter­viewed for this chap­ter say that the oil indus­try had a well thought out scheme to deceive the pres­i­dent and con­trol U.S. pol­icy in the Mid­dle East. The first part involved intel­li­gence fal­si­fi­ca­tion on a grand scale. This was no small-time Angle­ton Ves­sel forgery. This time, our sources insist, the pres­i­dent of the United States was to have his ‘pants scared right off him.’ The CIA was used to pro­duce phony oil data to show that the world’s two great­est oil pro­duc­ers, the Soviet Union and Saudi Ara­bia, were run­ning out of oil. The Sovi­ets would be forced to fight the United States for con­trol of Mid­dle East­ern oil.”

(The Secret War Against the Jews; by John Lof­tus and Mark Aarons; Copy­right 1994 by Mark Aarons; St. Martin’s Press; [SC] ISBN 0–312-15648–0; p. 332.)

19.

“It is hard to recall why he [Jimmy Carter] was so despised when he ws in office. Much of it has to do with the secret his­tory of oil pol­i­tics. Even dur­ing the 1976 elec­tion cam­paign, the oil com­pa­nies viewed the Demo­c­ra­tic can­di­date as Pub­lic Enemy Num­ber One. Carter cer­tainly had some rad­i­cal ides about energy pol­icy, which made the oil com­pa­nies fear­ful for the future and their profit levels.”

(Ibid.; p. 333.)

20.

“‘The whole phony scheme—the oil short­ages, the pre­dic­tions about Soviet troops in the Mid­dle East, the Saudi arms buildup—all of that crap started com­ing out of the agency back in ’76. The CIA told their boss what he wanted to hear, and in those days, the head of the CIA was an oil man.’”

(Ibid.; p. 334.)

21.

“Accord­ing to sev­eral of our sources, the scheme to man­u­fac­ture phony CIA esti­mates and push them on Carter began in the last days of Ger­ald Ford’s term. They claim that a cabal within the CIA real­ized that Carter would be the new pres­i­dent, pro­duced the first phony report, and then promptly gave it to Carter as soon as he won, know­ing how it would affect his view of the energy cri­sis. It should be recalled that George Bush was the direc­tor of the CIA at the time the oil scam was put in place in 1976. There is some evi­dence to sug­gest that it was Bush him­self who passed the fake oil esti­mates to Carter. In the imme­di­ate after­math of Carter’s win, Bush trav­eled to Plains, Geor­gia, to brief the incom­ing president.”

(Ibid.; pp. 334–335.)

22.

“‘Don’t you get it?” asked one of our sources. ‘The gas short­age dur­ing the Carter admin­is­tra­tion was as phony as the CIA’s pre­dic­tion about the Soviet oil short­age. The god damn Mid­dle East was swim­ming in oil dur­ing the Carter admin­is­tra­tion, but less and less of it ws shipped to Amer­ica. For chris­sakes, there was so much oil in South Amer­ica that they had to shut down refiner­ies I the Caribbean to keep it away from the U.S.”

(Ibid.; p. 353.)

23.

“Under the Repub­li­cans, lucra­tive arms fac­to­ries sprouted in what had pre­vi­ously been rural demo­c­ra­tic states. The votes went where the jobs were. In the course of the Reagan-Bush admin­is­tra­tions, the defense bud­get was increased to a point where more money was spent on arms than in all the wars in U.S. his­tory com­bined. To accom­plish this mas­sive defense buildup, the Reagan-Bush admin­is­tra­tions bor­rowed three times more money than all U.S. pres­i­dents com­bined The largest debt in Amer­i­can his­tory was based on the faulty premise that the Soviet Union was going to attack the Mid­dle East.”

(Ibid.; p. 355.)