[Editor note: Six regulatory personalities related to government intervention in the U.S. oil and gas market (through the mid-1980s) are identified by the author. The reader is invited to add categories or examples of regulators to this list.]
The classical tyrant that has frequented other countries has not been a factor in the U.S. oil and gas experience (or the U.S. economy). [1] The existence of private property and democratic institutions is the major reason; the moderating influence of the industry over intervention is another reason. Huey Long of Louisiana, who as governor and U.S. Senator, left a controversial mark on oil and gas politics, probably is the closest to being an exception.
Instead of tyrants, hundreds of legislators and regulators have shaped oil and gas intervention at all levels of government. Shades of difference have marked major figures, but one premise has been shared by all — the efficacy of government intervention to achieve economic and social objectives. This can be called the constructivist mentality: government planners substituting their knowledge for that of the decentralized market.
Six Categories
Six categories of the constructivist mentality can be delineated. There is the professional regulator who sees intervention as a way of life and a public duty. Financial well being is secondary to the call of state, and when regulation beckons he is ready. The outstanding example in the petroleum field is Harold Ickes who presided over the industry during the New Deal and in World War II. Mark Requa was in a class with Ickes but got his chance only in World War I.
Next there is the naive idealist who brings a well-meaning attitude to his regulatory tasks but becomes disillusioned with the results and either continues for want of an alternative or retires from the scene for another government position or the private sector. No doubt all major regulatory episodes have examples, but 1970s oil price and allocation controls would have the most.
Third is the opportunist, who sees intervention not only as appropriate in itself but as a means to the greater ends of power, income, and prestige. One example is Charles Owens of the Federal Energy Office, a young turk who played a major role with oil regulation in the formative 1972–74 period. Another example is President Eisenhower by virtue of his consequential, and to many, infamous gas-bill veto.
There is the anti-industry regulator, who combines a preference for intervention with a fundamental dislike or at least a deep-seated suspicion of the industry. To him the price of intervention is seldom too high despite the resulting distortions. Price controllers Leon Henderson, John Kenneth Galbraith, and Chester Bowles in World War II, and Michael DiSalle and Tighe Woods during Korean planning, were examples. Add an element of demagoguery and President Carter and his energy-czar James Schlesinger would be other major examples.
There is also the pro-industry regulator, who combines a propensity to intervene with a strong preference in favor of industry positions. Longtime Chairman of the Texas Railroad Commission E. O. Thompson is an outstanding example. Other examples would also center around oil-state conservation agency leaders.
A final category of constructivist architects is the pragmatic regulator, who differs from the opportunist by beginning with a fundamental dislike of intervention but warms up to the powers at hand. He may begin by championing intervention designed to make regulation more efficient and “market conforming,” but soon his actions are scarcely differentiable from an idealist of the opposite persuasion.
The most prominent example is William Simon, who jawboned, chastised, and regulated in his tenure as head of the Federal Energy Office in 1973 and 1974. As Treasury Secretary Simon continued to take interventionist positions, as demonstrated by his national-security finding in favor of oil tariffs in early 1975.
Another example of pragmatism in office was President Reagan’s appointment as Secretary of the Department of Energy, James Edwards. Edwards began with a vow to work himself out of a job by abolishing the agency but left several years later fully converted to the agency’s mission.
Behind the major regulators are an army of lower-level bureaucrats. They generally run the gamut from idealists to professionalists. But there is another characteristic, applicable to some and maybe more thann some, that critics have emphasized — relative incompetency. In a 1934 editorial inspired by a visit to Washington, D.C., veteran National Petroleum News editor Warren Platt concluded:
Washington is full of failures, full of people who could not earn what they are now getting anywhere else. . . . There are a few bright men down there who are using their jobs as a stepping stone but the rest are simply working in a treadmill. They shirk every step they can and salve their conscience with the thoughts that anyway the government “owes” them a better living than they are getting. [2]
Shielded from profit/loss and cushioned by civil service rules and political connections, untalented bureaucrats aggravate inefficiency already inherent in government operation.
Postscript
The above classifications must have the flexibility to describe an individual who changes his primary motivation, or has elements of more than one trait. It is a historical tool and must be used appropriately with is (was), not ought or could.
A question for the reader. Are there other categories in addition to the above six? And what examples from recent decades can be added to the names above?
[1] The classical tyrant is described in F. A. Hayek, “Why the Worse Get on Top,” The Road to Serfdom (Chicago: The University of Chicago Press, 1944, 1976), pp. 134?52.
[2] Quoted in National Petroleum News, October 3, 1934, p. 12.
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NOTE: The body of this post is taken from pp. 1864–1866 of Robert Bradley, Oil, Gas, and Government: The U.S. Experience (Cato Institute: 1996).
Let’s take an energy regulator like S. David Freeman who came from the Tennessee Valley Authority to run the California Power Authority in the midst of the California Energy Crisis of 2001. He constructed a social image of himself as a “green cowboy,” wearing a cowboy hat but dismantling nuclear energy plants everywhere he went. I wouldn’t call him a “naive idealist,” or a “pro-industry regulator,” or a “pragmatist.” An “opportunist” and “anti-industry regulator” would be more fitting descriptions of the social roles that Freeman took when running California’s energy crisis. He had an occupational ideological blindness to see the consequences of his policies. He touted himself as a “green” reformer, but shutting down nuclear power plants resulted in more, not less air pollution.
He also was the architect of fabricating an energy pricing bubble in California during the energy crisis as a way to pay off the billions of dollars of stranded assets of unpaid bonds on old decommissioned power plants. His bubble policy failed miserably and California eventually had to roll $42 billion in unpaid bonds into a megabond to be paid off by increasing water rates in California.
California has recently shut down its San Onofre Nuclear Power Plant permanently, only to find that air pollution has increased dramatically even with all the solar and wind power coming into the California energy market. The top energy regulators are those who can socially construct a legitimation for the policies they make. The green ideology is the dominant legitimation for energy policy in California regardless of its actual consequences. The roles that energy regulators fashion for themselves often cover the consequences of their actions. In this sense maybe Freeman was what we might call a shrewd idealist or opportunistic green idealist.
Bradley’s typology is helpful as describing what sociologist Max Weber called “ideal types,” which are caricatures that don’t always match the hybrid social roles that regulators construct for themselves. I think the social role typology above needs to be paired with what ideological rationale each regulator embraces to legitimate their actions and policies.
I’m not sure this would be an addition to the list, as it really isn’t a ‘regulator’ per se, but there should be a category for outside-of-government folks who are “enablers” (much like the significant others in lives of addicts) of the various forms described above. In today’s world that would include folks like Tom Steyer and other bootleggers.
Wayne, your point is that the ‘regulatory personality’ can be a hybrid, and it can change over time.
Tom, yes outside enablers are at work, which would invite another typology related to regulation.
Below I have attempted to put Robert Bradley’s Energy Regulator Personality Types into sociologist Robert K. Merton’s Social Strain Theory of Deviance
CONFORMITY
*Professional regulator – ACCEPTS GOALS/ACCEPTS MEANS
INNOVATION
• Pragmatist – ACCEPTS GOALS/REJECTS MEANS
• Opportunist – ACCEPTS GOALS/REJECTS MEANS
RITUALISM
* Anti-industry regulator – REJECTS GOALS/ACCEPTS MEANS
RETREATISM
*Naïve idealist – REJECTS GOALS/REJECTS MEANS
REBELLION
* Pro-industry regulator +/- +/- NEW GOALS/NEW MEANS