The New York Timesleads with word that four big Western oil companies are on the verge of signing no-bid contracts with Iraq. The contracts would take Shell, Exxon Mobil, Total, and BP, who were the original partners in the Iraq Petroleum Company, back to Iraq 36 years after Saddam Hussein kicked them out. The Los Angeles Timesleads with, and the Washington Post and Wall Street Journal front, a report by the Government Accountability Office that says the Air Force followed a flawed process when it decided to award a $35 billion tanker contract to Northrop Grumman. The federal auditors said the Air Force “made a number of significant errors” and urged the Pentagon to reopen the bidding process. It marked a huge victory for Boeing, which had appealed the Air Force’s decision, saying that it had not been treated fairly and now is likely to get a second shot.
USA Todayleads with new numbers that report Americans drove 30 billion fewer miles from November through April than during the same months a year earlier. It marked the steepest drop since the shortages of 1979 and 1980. The paper notes that Americans are driving approximately the same number of miles as in 2005, “when the USA had 8 million fewer people.” Experts agree these numbers illustrate how consumers are changing their habits as a response to rising oil prices. The WSJ leads its world-wide news box with the continuing floods in the Midwest, where officials predict as many as 30 levees could overflow this week. The WP leads locally with a new report that reveals the number of foreclosures in the Washington region has grown faster than in most other major metropolitan areas.
The contracts that the four Western oil companies will sign with Iraq’s Oil Ministry aren’t particularly large, but they would give the oil giants an advantage when bidding for future contracts that everyone predicts will be very lucrative. Iraq is widely seen as one of the few countries in the world where oil production could expand by a significant amount in a short period of time, and more than 40 companies from around the world wanted in on the action. But Iraq’s Oil Ministry decided to award no-bid contracts, which, as the NYT points out, “are unusual for the industry.”
Iraqi officials insist the short-term contracts are simply a temporary solution to improve technology while the country’s oil law continues to languish in parliament and the companies were chosen because they had been providing free advice for two years. But while it’s true that the companies had been assisting the Oil Ministry under memorandums of understanding, dozens of other companies also had similar agreements yet were not awarded contracts. And it seems that the four companies would have an advantage over competitors in the near future. The NYT notes near the end of its story that under a clause in the draft contracts, the companies would be allowed to “match bids from competing companies to retain the work once it is opened to bidding.”
The Air Force contract to update its fleet of tankers that can refuel planes in midair has been plagued with controversy for years. In February, when it was announced that the contract would go to Northrop, many immediately cried foul, saying that the move would cost thousands of jobs inside the United States. The GAO report, which apparently “was met with a sense of shock” ( LAT) at the Pentagon, marks the latest in a series of high-profile embarrassments for the Air Force and came just a few weeks after the two top Air Force leaders were fired. Everyone emphasizes that the GAO can’t force the Air Force to reopen bidding on the contract, but the service seems to have little choice, particularly since some lawmakers are calling for a congressional investigation. Meanwhile, “at 47 years old, the average tanker is now older than the pilots who fly it,” notes the WSJ.
The WSJ highlights, and the Post devotes a Page One story to, the debate currently going on in the Midwest about whether the surge in development helped cause the huge floods that are currently afflicting the region. The WSJ focuses on Missouri and the WP on Iowa, but the message is the same as scientists say that development has largely altered the region’s landscape and has made it easier for flooding to take place. “We’ve done numerous things to the landscape that took away these water-absorbing functions,” one environmental expert tells the Post.
Who’s to blame for the high price of oil? Depends on who you ask, says the LAT, which notes in a Page One piece that everyone seems to be busy pointing fingers these days. “Oil producers are blaming speculators, speculators are blaming consumers and politicians are blaming one another,” the LAT summarizes. It’s a complex issue with lots of different factors, but President Bush knows just who to blame: Democrats in Congress. Yesterday, Bush called on Congress to lift the 27-year-old ban on offshore oil drilling, and Democratic leaders responded by basically saying, “Dream on.” But even if the ban were lifted, the NYT notes that offshore oil exploration isn’t likely to increase anytime soon for the simple reason that there’s a shortage of the ships that are needed to do that kind of work. Demand for the ships is so high right now that builders have increased prices fivefold to about half a billion dollars each.
While everyone seeks an answer on what can be done about oil prices, the NYT and LAT publish op-ed pieces with identical titles: “Sue OPEC.” In the NYT, Thomas Evans writes that the “president of the United States has the power to attack, and perhaps destroy, the Organization of the Petroleum Exporting Countries” by allowing states to “seek relief in the Supreme Court under our antitrust laws.” In the LAT, three law professors write that the House has already passed a bill that would have allowed the Justice Department to charge OPEC with violating antitrust laws, but Bush has vowed to veto the legislation, saying that the oil-producing countries could choose to retaliate, and Republican senators have stuck by the president. * “If we are afraid of OPEC, remember that our decades of putting up with this cartel have done nothing to reduce oil prices.” Both pieces argue that even if the suits aren’t successful, they would at the very least call attention to what Evans calls “OPEC’s destructive behavior.”
The NYT fronts a look at how Sen. Barack Obama’s campaign is seeking to control the candidate’s image more tightly as he moves into the general election campaign. Even though political insiders have praised the campaign for its discipline, “[I]t has also created some early turbulence for a candidate who has run on promises of openness and cultivated a grass-roots following,” says the Times. The strange thing about the story is that it makes it seem as though this is a recent development and that Obama has closed himself off only after he became the presumptive nominee. In fact, the WP’s Howard Kurtzwrote a story back in January about how the man who “touches so many Democratic hearts feels no need, for the moment, to reach out to journalists.” Today, the NYT confirms that the moment continues.
If the campaigns of the two presumptive nominees have one thing in common, it is that it looks like they could both use better location scouts. The LAT notes that eyebrows were raised this week when Obama’s campaign chose Detroit for the candidate’s appearance with Al Gore. There were plenty of battleground states to choose from, yet the campaign picked “the one state where words from perhaps the world’s best-known advocate for transforming oil-based economies might be greeted with chagrin.” For his part, Sen. John McCain chose Houston to announce that he had changed his mind on offshore drilling. Sure, lots of industry executives in the country’s “energy capital” praised the move, but it made it easier for critics to say he was pandering to big business. “Long-haul truckers or residents of exurbs in Ohio or Pennsylvania … might have been just as welcoming toward McCain’s new policy.”
* Correction, June 19, 2008: This piece originally stated that Congress passed legislation that would have allowed the Justice Department to charge OPEC with violating antitrust laws. That bill, H.R. 6074, was only passed by the House of Representatives. (Return to the corrected sentence.)
