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FTR #420 The Destabilization of California Pt. 2

MP3 Side 1 [1] | Side 2 [2]
RealAu­dio [3]

Sup­ple­ment­ing FTR 280 [4], 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 .)


“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.”


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.”



“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.”


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.)


“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. . . .”


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.)


“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.”



“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.”


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.)


“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.) [5]


“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.)


“ ‘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.)


“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.)


“ ‘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.)


“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.)