Before the resignation of Sandra Day O'Connor, official Washington was awash with the news that the Chinese government, through its China Offshore Oil Corp, might purchase Unocal, the 9th largest U.S. based oil company. It's obvious why the Chinese government might want Unocal -- just for starters, it has significant oil and gas reserves in Asia and some promising proprietary oil exploration technology. And perhaps it's obvious why ChevronTexaco wants it -- the dramatic rise in oil prices has left Chevron, as well as its fellow giant Exxon, with literally tens of billions in cash sitting in the bank.
Dozens of legislators have written Mr. Bush asking him to seriously consider the national security implications of the Chinese communists owning this once proud American oil company. According to Roll Call, most of this bipartisan group had received campaign contributions from Chevron. Both sides have hired lobbyists with close ties to the Bush Administration to press their case. The House has already passed legislation that seeks to bar the Chinese takeover.
I, for one, would have felt much better about appealing to the President if these same legislators had raised a dozen other national security issues with Mr. Bush, ranging from our world-worst car fuel efficiency to growing nuclear proliferation.
It is worth noting that Unocal is an oil company with a distinctly unpleasant aroma to it -- drawn to oil and gas exploration and distribution in precisely those areas with the greatest human rights violations. Of most note is Unocal's pipeline in Myanmar -- the former Burma. Unocal operates there despite official U.S. policy and with full knowledge of the brutal human rights record of the generals who run the country.
And who can forget from Fahrenheit 911 that it was Unocal that was lobbying the Bush Administration to allow it to construct a pipeline through Afghanistan in a financial arrangement that would have enriched the Taliban? I am not making this up!
Some years ago, Unocal was the subject of a very rare effort by a group of California consumers and environmentalists to have its corporate charter revoked by the state of California. No doubt they deserved the fate, even though the effort failed.
China's demand for oil and gas is skyrocketing -- one of the key factors in the rise in oil prices over the past year. As a nation -- through its state owned oil companies and through joint venture -- China is aggressively seeking access to oil. It clearly wants to own and control oil resources where it can rather than relying on the vagaries of the international oil market -- hardly a surprise for a communist regime. Due largely to cheap labor and an undervalued currency, the U.S. trade deficit with China has exploded, providing cash reserves that make it trivial for CNOOC to purchase Unocal.
Do progressive have a stake in this battle between Chevron and China? Here are a few questions to ponder.
In a pinch -- say, a future conflict where oil exports to the U.S. are cut off temporarily in a dispute with Venezuela or a Shiite regime in Baghdad -- would China or Chevron be more likely to seek political or commercial advantage against American consumers from the Unocal resources?
Is China or Chevron more likely to pressure Myanmar to release from periodic house arrest Nobel Peace laureate Suu Kyi? One clue is that China is one of the largest international investors in Burma, as well as a major supplier of arms to the Burmese military.
This debate is another bit of evidence that the Bush Administration's economic and energy policies are failures. If oil prices were lower due to lessened demand for gasoline, perhaps Chevron would not have enough idle cash to purchase its competitors. And if China's exports to the United States were half what they are, Unocal would not be such a tempting target.
Perhaps the best approach is a pox on all their houses. Unocal should go out of existence, and progressives should pressure both China and Chevron to join the campaign for democracy in Burma.
Michael Kieschnick is the President and CEO of Working Assets.
© 2005 Working Assets