The Persian Gulf crisis is hardly four months old, but already it has troubled Americans in special ways, making them a people anxious about war--the people in the 4400 block of North Oakland Avenue, for instance, in Shorewood, Wis.
There, along a strip of storefront offices, is the Military Families Support network--a group of unlikely foot soldiers in this country's reawakening peace movement. Hardly political radicals, these are solid Middle Americans. Even their headquarters bespeaks the heartland. Tucked in alongside a picture-framing shop and a tanning salon, it is flanked by a bank and a barbershop.
Amid a tangle of wires and stacks of mail, conservatively dressed and mostly middle-aged men and women staff telephones, fax machines and personal computers. Far from the college students who first protested the Vietnam War, they are the parents and wives of soldiers--like Alex Molnar, founder of the group, who has a Marine son in Saudi Arabia.
They do not want their children--or their husbands--to risk their lives in a conflict whose rationale they either oppose or find troublingly obscure.
Similarly, Judy Davenport in Charleston, S.C. Her husband, Larry, is a boiler technician chief on a Navy ship in the Middle East. Judy, 39, and her youngest son, an eighth-grader, live in military housing at the Naval Weapons Base in Goose Creek, S.C. She drives a pickup truck. Painted on the back window are the words: "No War." It gets her and her son a ration of grief. They have been ostracized.
"We support our troops no matter what," she declares. "They took an oath to defend our country and uphold the Constitution. But they didn't take an oath to keep gasoline at $1.29 a gallon."
Judy runs a temporary-employment business. Nonetheless, her husband's absence is a hardship.
So is opposition to her activities. Officials at the weapons base have told her to quit giving interviews on military property.
Harassment is a hardship, too. Sometimes it comes when the going gets toughest.
But she tries to buck up. "It hasn't been too bad--just some middle-of-the-night nasty phone calls."
There is a tiny note of scorn in her voice reserved for college students, who were at the forefront of the anti-war movement during Vietnam but are hardly heard from now.
"You'd see a different reaction," she snaps, "if they were draftable."
As for the telephone calls and the military who will not let her speak on her husband's base, she is adamant. "My activities are my personal business," she says. "My husband's in the military to protect my freedom of speech."
Some women who oppose war say their kin, far away in the Middle East, feel the same way.
"We don't oppose the multinational defensive role," says Tracy Meyer, a 28-year-old Falls City, Neb., woman whose cousin is a U.S. commander in Saudi Arabia. But she and others criticize what they see as the Administration's absolute refusal to consider non-military alternatives until Iraq withdraws from Kuwait. They fear that President Bush has locked their husbands and their sons onto a course--without sufficient public debate--that will lead to a bloody conflict.
Meyer refuses to give the name of her cousin, the commander. She cites concern for his well-being.
But she adds: "He feels the way I do."
Nor are all of these dissenters women. Bill White in San Antonio, who flew 136 missions over Vietnam and prosecutes narcotics cases in Bexar County, Tex., thinks Congress has been "laying behind the log."
Congress, White said, should be challenging Bush to define and explain his policies.
"Now is the time to have an open debate and see where our objections are," White says. He has both a son and a daughter in the gulf region. "We started out in Vietnam approving the policy--and then wound up condemning our troops.
"Let's not let that happen again."
Like Bill White, Brenda Jarmon has two kin in the gulf: her daughter and her daughter's husband. Their names are Lynette and Isaac Guthrey, and they, too, have a daughter. She is one of a number of youngsters in America who are calling this crisis "mom's war."
Because Lynette and Isaac are both in the Army, daughter Ikea, 2 1/2, has been shipped off to Tallahassee, Fla., to live with her grandmother.
"It's sad when military mothers are taken away from their children and sent to a potential war zone," Brenda Jarmon says.
"My granddaughter has the potential of losing both parents."
Donnita Cole, too, is worried about war.
She has festooned her modest home in Odessa, Tex., with yellow ribbons. Her son is an American soldier in Saudi Arabia; her husband is a human shield somewhere in Iraq. And she is about to defy her government by going to the Middle East.
Cole, 48, wants to see her husband--and hopes to gain his release.
A 60-year-old oil field worker, he got trapped in Kuwait at the time of the Iraqi invasion. Donnita Cole and about a dozen other wives of hostages will travel in a group, undaunted by the President's admonition not to go because they might be used by the Iraqis for propaganda. Their feelings are clear.
"Nobody's helping us," says Kim Edwards, 38, of Carson City, Nev., who is heading up the women's delegation. "And so we have to help ourselves."
In the Persian Gulf crisis, America has deployed an all-professional armed force for the first time in this century.
Not a single U.S. serviceman in the Middle East is there because he has been drafted. And what is happening in the United States today reveals the domestic consequences that will follow from that fact in this and other situations to come.
All-volunteer forces tend to attract people without other means to make a living.
The U.S. forces in Saudi Arabia, for instance, include a disproportionate number of young men and women from "a cross section of lower-middle class America," says Charles Moscos, a military manpower specialist at Northwestern University. This lower-middle class armed force is not only disproportionately poorer white, but also disproportionately black and Latino.
More than 25% of last year's U.S. Army recruits, for example, were black--about twice the percentage of blacks in the general population.
Since the United States adopted its all-voluntary military force in 1973, more often than not the men and women who have joined have been like Ikea Guthrey's mother and father, lured by the promise of vocational training, educational benefits--a chance to "be all you can be" and, maybe, escape from poverty.
"When your kid signs up, you think it's a nice opportunity," says Brenda Jarmon, Ikea's grandmother and now her sole guardian. "I just never thought about this (combat) aspect of the military for Lynette.
"Never once did anything like this cross my mind."
Jarmon is not alone in her realization of the danger. A recent Los Angeles Times Poll showed that U.S. opposition to war in the Middle East was strongest at the lower rungs of the socioeconomic ladder. Fifty-eight percent of the respondents from American families with annual incomes of $20,000 or less said they did not want to see a war.
That was a far larger percentage of opponents than from any other income group.
At the same time, far fewer blacks and Latinos than whites said the United States should wage war. When asked whether the United States "should go to war against Iraq," only 24% of the black respondents to the poll said yes. Thirty-two percent of the Latinos said yes, and 40% of the whites.
Opposition to war is playing a significant part in a precipitous decline in popular approval of Bush's handling of the gulf crisis.
The President enjoyed an immediate increase in support during the first days after he sent troops to the Middle East. Most Americans traditionally back their commander-in-chief immediately after a foreign dust-up. What happens to that support, however, is what counts in the long run.
It went into a sharp dive in early autumn.
A Gallup Poll on Sept. 10 showed that support for Bush's handling of the crisis had fallen from a high of 80% in early August down to 76%.
By Nov. 11, support had fallen to 61%
Meantime, Bush's general popularity rating had fallen from 76% to 58%.
The drop is breathtaking, says Republican political analyst Kevin Phillips. "The sharpest decline anyone can remember without a scandal."
ON THE TRADING FLOOR
Michael Wilner was shaving about 5 a.m. on Aug. 2 when a radio newscaster reported that Saddam Hussein's tanks had crossed the Kuwaiti border.
Shocked, the 35-year-old president of Hilltop Trading Co. dashed to the door of his Manhattan apartment. He grabbed the Wall Street Journal, then dialed the London markets, where he learned that oil prices had already soared to the maximum increase allowed in a day's trading.
"By the time I came to the trading floor, the floor was abuzz about it," he says of his arrival a few hours later at the New York Mercantile Exchange. "It was like you might imagine in a hurricane or a blackout. Everybody was asking each other: 'What's happening? Who's been hurt?' "
Millions of dollars were riding on the answers to those questions. By the opening bell, the floor was a frenzy of shouting and shoving. At day's end, prices had jumped by $2.12 a barrel to $23.71, heading over $40 a barrel by the end of September.
Like other commodities markets, this one is a fantasy, a casino for people who bet on future prices. Over and over, these traders--"Wall Street refiners," they are called--buy and sell barrels of crude without ever having to dip their tasseled loafers into oil field mud. What they own are paper promises to deliver 42-gallon barrels of a specific crude at a defined price on a certain date.
But the paper promises have a very real effect on the world beyond. The oil futures market, which didn't even exist a decade ago, has revolutionized the system, unseating OPEC and the major oil companies as the dominant force in setting the price that consumers pay for gasoline and heating oil.
Recent months have seen oil prices take a Mr. Toad's wild ride up and down. While economists like to speak of markets as efficient and orderly, the daily melee on the trading floor of a commodity market is anything but.
Along with major world events, the strangest of rumors suddenly found eager ears.
Hear that Hussein had dispatched a herd of "kamikaze camels" loaded down with weapons? Buy! That the Iraqi leader had fled his country dressed as a woman to open a pastry shop in France? Sell! Sell!
Oil prices took their sharpest drop ever on news that Mohammed had come to Hussein in a dream and told him to turn his rockets around.
Critics insist that retail prices, which have jumped more than 30 cents a gallon for gasoline and doubled for jet fuel, would not have soared so high during the gulf crisis if not for the futures markets.
But analysts say the public is best served by the free and flexible markets that have transformed the delivery and pricing of energy in the 1980s. They say the key to preventing gas lines, rationing and shortages is making sure that buyers and sellers are free to sort out supply and demand without hinderance.
"Everybody blames the speculators," says David Wood, director of energy policy research at the Massachusetts Institute of Technology. "But it seems to me the market has played a really remarkable role in managing this supply interruption."
The oil futures market was introduced in the early 1980s as a direct outgrowth of the breakdown of market control by the major oil companies.
As long as prices were held artificially low, consumers had little incentive to conserve and oil companies had no reason to bring more fuel onto the market. The inevitable result: regional shortages, gasoline rationing and lines at the pump.
Stuart E. Eizenstat, who was President Carter's domestic policy adviser, concedes that failing early in the Carter Administration to urge the lifting of gasoline price controls was "maybe the most serious policy mistake that I made. If we had deregulated gasoline in 1979, there would have been no lines--higher prices, but no lines."
Eventually, Carter recognized the problem and began dismantling the oil-price regulations. One of Reagan's first acts in office in 1981 was to abolish the few oil-price controls that remained. From there on out, his approach was to let the market take care of the market.
By reflecting fears, predictions, even hunches, today's futures markets help ensure a global balance of supply and demand.
Among those who think the futures market should not be tampered with is William Hogan, a former energy official under the Ford Administration who is now at Harvard's Kennedy School of Government.
"Sometimes," he says, "the optimal national policy is: 'Don't just do something. Stand there.' "
IN HOUSTON, THE OIL CITY
Oil built Houston.
This is where George Bush, after striking it rich in the Midland oil fields of Texas, launched the political career that 30 years later led him to the White House. And this is where two oil price shocks in the 1970s, so disastrous to much of the rest of America, fueled a feverish, decade-long oil boom that produced thousands of instant millionaires and spread wealth like a gusher.
Oil ruined Houston.
When the boom finally collapsed in the mid-1980s, as prices plunged to as low as $10 a barrel, the dreams of this area's more than 3 million people turned into nightmares. The downtown skyline of empty office towers stood as a mocking monument to failed hopes. Its banks fell into outsiders' hands. This was where the nation's $500-billion savings and loan disaster had its ignominious start.
So it was perfectly apt that this still-crippled city, just beginning to stir from its economic devastation, was where OPEC Secretary General Subroto came last Feb. 6 to deliver a message that most of the world ignored.
Standing before a conference of 500 energy executives, the Indonesian oil minister warned that demand for OPEC oil was rising faster than the cartel could deliver it. Sure, the oil was out there, with big new discoveries boosting known OPEC reserves to their highest levels in decades. But the world's appetite for oil also was growing again; without an investment of a staggering $60 billion in new production capacity, the Organization of Petroleum ExportingCountries would lack the pipelines, refineries and tankers to transform crude oil into gasoline, jet fuel, heating oil and other petroleum products. That meant OPEC and other oil exporters around the globe simply could not meet the demands of ever-thirstier consumers.
If everything ran smoothly, of course, prices would edge up gradually. But the slightest disruption in oil supply, Subroto warned, could mean a full-scale disaster.
With all the world's oil producers already pumping at dangerously high levels, there was no room for a slip-up. As leading energy analyst Daniel Yergin, president of Cambridge Energy Research Associates, puts it, the complex system that delivers petroleum from oil wells on the other side of the globe to gasoline pumps around the corner had become "accident prone." Moreover, oil itself, Yergin notes, "more than any other commodity, is intimately intertwined with nationalism and national power, subject to political and military struggles for its control."
Not content to wait for an accident, Saddam Hussein prepared the snare that would create the world's third--and by far its worst--oil supply interruption.
But this time it would be different.
Over the past decade, America has been forced to give up its fantasy of energy independence. It now confronts the future much more realistically--but with a renewed sense of dread. It is a future that holds dwindling oil reserves outside the Middle East and a growing concentration of production in a few vulnerable countries within that perpetually unstable region.
For that reason, the immediate confrontation with Saddam Hussein will not mark the last such challenge for Americans, whose economy runs on oil.
With the United States the biggest hog at the energy trough, the first challenge will be to use energy more efficiently--and to boost the availability of North America's vast supplies of natural gas. Another will be to help insulate the economy from the worst ravages of the sudden oil price hikes that have struck the world three times in the past 20 years--and now are as inevitable as earthquakes.
By many measures, the Persian Gulf crisis has triggered the most spectacular oil shock the world has seen since World War II. The international embargo of Iraqi and Kuwaiti oil has taken more than 4 million barrels a day, or roughly 8% of total output, off the world market. That's more than half again as big as the disruption that occurred during the 1979 Iranian revolution and more than the amount lost in 1973, when the Arab countries imposed an embargo during their war with Israel.
This summer, prices shot to record highs, not so much because of actual shortages, but on fears that war in Saudi Arabia could lead to chaos if the world's most important oil fields were destroyed. The price explosion almost certainly helped push an already shaky U.S. economy over the brink into its first recession in almost eight years.
But in crucial ways, the adjustment this time has gone much more smoothly than during past oil crises. There have been no shortages, no 1970s-style lines at the gas pump. Prices at gasoline stations jumped sharply, but for all the complaints of oil company price gouging, the increase was not nearly as much as consumers might have expected from speculative levels of more than $40 a barrel on the crude oil market.
Moreover, compared with what consumers were paying a decade ago, oil is still a bargain. Taking into account the reduced buying power of today's inflated dollar, gasoline prices would have to reach almost $2 a gallon before they would hit driver's pocketbooks as hard as they did in 1981.
There are several reasons that the country has made a relatively easy adjustment to what would have been a paralyzing crisis only eight years ago. But every bit of good news underscores the difficulties ahead.
One reason for the easier adjustment is that major discoveries have bolstered the world's oil reserves, reassuring most industry officials that any sharp price increase is likely to be temporary. Just five years ago, it was believed that world reserves could last only another 34 years; now that estimate is up to a half-century.
Virtually all those new supplies, however, are in the Middle East. Elsewhere, reserves are dwindling, particularly in the United States. In the early 1950s, America pumped more than half of all the oil consumed on Earth. Now the United States needs to import about 7.5 million barrels a day to meet just half of its own demand.
While no big fields have been found outside the Persian Gulf since the early 1970s, Saudi Arabia continues to stumble upon new oil finds with disarming ease.
"They look for water there and they find oil," says William Hogan of the Kennedy School of Government. "As far into the future as anyone can see, the world's industrial powers are going to be dependent on oil from the Middle East."
A second reason for the easier adjustment is that consumers and businesses are using oil far more wisely. This country uses only two-thirds as much oil as it once did for every dollar it generates in gross national product. Without those savings, the United States would be burning 23 million barrels every day, rather than the roughly 17 million it now consumes.
Southern California Edison, for example, relied on oil for 46% of its generating power in 1975 and once expected to be using up to 100 million barrels of oil a year by the mid-1980s. Instead, the power company now burns less than 5 million barrels even in the worst years and depends on oil for at most 4% of its needs.
As a result, the prices of some forms of energy no longer are tied closely to oil prices. The costs of electricity and natural gas, for instance, have barely budged despite the spike in oil prices.
Nonetheless, consumers and businesses have backslid in the past few years. With only 2% of the planet's population consuming a quarter of its oil, the United States still uses up about twice as much energy to produce a dollar's worth of goods or services as Western Europe or Japan. They tax gasoline heavily and encourage conservation through a variety of other means.
Ultimately, what the gulf crisis has proved is that there is no such thing as cheap oil. In the future, the price for inexpensive, abundant energy could be human life itself.
"The hidden cost of cheap energy," says Unocal Chairman Richard J. Stegemeier, "is the military option."
IN THE OIL FIELDS
Along the hilly western rim of Kern County, Calif., more and more oil pumps are bobbing up and down these days, like big, clumsy birds.
"People are starting to put their equipment back to work," Bakersfield oilman Rod Nahama says. "You only have to go out to the oil fields to see that things are happening."
Just last spring, Nahama shut down 20 wells in McKittrick, 35 miles west of Bakersfield. Even in good times, the thick, tarry crude--a stone won't sink in it in cold weather--was hardly the champagne of petroleum. And when prices plunged below $10 a barrel, he started losing money.
All that changed when prices soared following the Iraqi invasion of Kuwait. Nahama started the 20 wells up again--plus three more. The McKittrick property now yields 100 barrels a day--and Nahama may bring several more wells on line by year's end. Nonetheless, he doubts that today's higher prices will be sustained.
In Parachute, Colo., "For Sale" signs sprout among the weeds in the vacant lots and on the fronts of faded buildings. Yet within a 100-mile radius of this down-and-out little town lie riches beyond measure--more oil than in the entire Middle East.
In the early 1980s, when almost everyone was expecting $100-a-barrel oil before the end of the century, Parachute and nearby Rifle were boom towns. But the oil is locked in rock known as oil shale--and no one ever came up with a way to retrieve it at a price that would generate a profit.
Mayor Dave Beasley did all right running a gift shop, until a highway bypass was built back in 1982. One month, the only business he got was a $200 bad check from someone leaving town. So he closed up and moved closer to the traffic. He started selling cider from an empty lot across from the access ramp.
People wondered if things would pick up when Iraq invaded Kuwait. But ordinary oil, climb though it did, remained cheaper than Parachute oil. Beasley went on selling cider.
These are mere stirrings. Barring a catastrophe in the Middle East, there will be no huge domestic oil rush--or any rush to develop domestic oil or alternative forms of energy.
Much of the oil that is left in the United States is difficult and costly to extract. The average well in the United States produces only 15 barrels a day, compared with an average of 9,000 for each Saudi well. Even the giant Prudhoe Bay field in Alaska is slowly petering out.
With only one truly promising oil province remaining to be explored--the environmentally sensitive Alaskan Natural Wildlife Refuge--the United States, at best, can only hope to maintain its current production of about 7 million barrels a day. Big increases seem to be unlikely.
Most of the alternatives to oil propounded in the 1970s went against the grain of the Reagan Administration's philosophy: Let markets work without the hand of government giving them a push.
By the late 1980s, the Reagan Administration had all but killed the federal government's programs to develop synthetic fuels, solar energy and other oil alternatives.
The future for synthetic fuels looks no better now than it did then.
Even today, with oil prices hovering above $30 a barrel, alternative energy sources--schemes that may have seemed the wisest of investments only a few years ago--look like folly.
The battered nuclear power industry, too, shows no signs of rising from the mat.
Few experts think the gulf crisis can overcome the public mistrust of nuclear power that had begun taking shape long before the harrowing 1979 accident at Three Mile Island.
Moreover, it is difficult for utilities to justify the huge investments necessary for the big central power stations powered by nuclear energy--stations that take a decade to build. At the same time, a fast-growing independent power industry that barely existed a few years ago is able to build, in a mere two or three years, more reliable and less costly generators that rely on natural gas.
Over the long run, electric cars hold out one of the few promises of making a dent in oil usage. Seen today as primarily a clean-air alternative to gasoline-driven cars, electric automobiles may be able to start competing on more equal economic terms late in the decade if current plans to produce them in quantity pan out.
Batteries can be charged at night, when demand for electricity is lowest. Southern California Edison, for example, estimates that it could supply the power for roughly 1 million electric vehicles without having to add to its current capacity.
But it will take more than the gulf crisis to put electric cars on Southern California freeways.
So far, its only legacy is disruption and a deep disquiet.
The Consequences What Next on the Home Front Look for: More restive worry about oil prices, more pressure to bring energy prices down. A higher-profile anti-war movement. More political pressure for diplomatic alternatives.
Mideast Oil: The Arab Economic Treasure
The sheikdom is the key factor in the world's most important industry. If Hussein overruns it, he would control 45% of the Earth's oil reserves.
Top 10 crude oil reserves
(billion barrels, estimated) 1) Saudi Arabia: 254.96 2) Iraq: 100.00 3) Kuwait: 94.52 4) Iran: 92.86 5) United Arab Emirates: 92.20 6) Venezuela: 58.50 7) Soviet Union: 58.40 8) Mexico: 56.36 9) United States: 25.86 10) China: 24.00
Top 10 crude oil producers
(million barrels per day) 1) Soviet Union: 11.43 2) United States: 7.39 3) Saudi Arabia: 5.60 4) Iran: 3.00 5) Iraq: 3.00 6) China: 2.75 7) Mexico: 2.61 8) United Arab Emirates: 2.00 9) Venezuela: 2.00 10) Kuwait: 2.00
Where Saudi crude oil goes United States: 27.0% Western Europe: 19.1% Latin America: 5.2% Japan: 15.3% Other Asia, Far East: 21.4% Middle East: 6.7% Other: 5.3%
Sources: U.S. Dept. of Energy, Energy Information Administration, Oil & Gas Journal
Since the invasion of Kuwait on Aug. 2, America's reliance on Mideast oil has been dramatically exposed. Crude oil and retail gas prices have risen and show no signs of reaching pre-invasion prices in the near future.
Crude Oil Prices
Daily closes for light sweet crude Aug. 1: $22.10 Iraq invades Kuwait Aug. 2 Nov. 15: $31.12
Price per 42-gallon barrel, oil for near-term delivery, traded on the N.Y. Mercantile Exchange.
Retail Gas Prices
Based on a telephone survey of 1,400 retail gasoline stations. Aug. 1: $1.075 Nov. 20: $1.359
Price per gallon for self-serve regular unleaded gasoline.