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f you've kept up with automo–
tive news lately, you're proba–
bly aware that there has been a
running battle between Detroit
and Congress over the apparently
confticting standards of higher fuel
economy and cleaner exhausts.
Detroit has repeatedly maintained
that under present circumstances
the two tend to be somewhat in–
compatible.
One automaker in Japan ,
named Honda, thought differently.
Several years ago it introduced the
"compound vortex controlled com–
bustion" engine (sometimes called
stratified charge, or CVCC for
short) and announced that it
would meet the Environmental
Protection Agency's tough new
1975 emission standards two years
ahead ofschedule.
Detroit was visibly unimpressed
at the time. According to
Fortune
magazine, the industry did not re–
gard the engine as "sufficiently de–
veloped."
Time
magazine tben
reported that Detroit automakers
"doubt that the engine will meet
the EPA's extremely tough stan–
dards for 1976, especially those for
nitrogen oxide."
The rest of the story is history.
GM, with the other domestic auto–
makers in its wake, opted for a
ducers to stay afloat in markets that
were increasingly dominated by ma–
jor corporations. In east Texas, in–
dependents had a running battle
with the majors over who would
control the flow of their oil. Even
though there was an overabundance
of oil in those d.ays, the majors
made sure that only so much of it
reached the market al any given
time. This was accomplished
through the establishment of the
Texas Railroad Commission, which
was authorized to "prorate" the
amount of oil flowing from produc–
ing wells. This meant that indepen–
dents could
prod~;~ce
only as much
as their assigned quotas and no
more. It was a cozy arrangement for
18
costly add-on device known as tbe
catalytic converter and still needed
a year's grace
in
order to meet the
emission standards. Honda. on the
other hand, was two years ahead
of schedule, and its vehicles con–
sistently rated at the top of the
EPA's gas mileage scorecard.
But Detroit wasn't about to ad–
mit that maybe Honda had a bet–
ter idea. As late as 1975 the
president of General Motors was
still beating the drum for add-on
emission devices. "We have stated
often and unequivocally," he
wrote in a letter to the
Wa/1 Street
Journal,
"that if a power plant or
emissions control system carne
along that was superior to the in–
ternal combustion engine and the
catalytic converter, we would not
hesitate to adopt it."
Fortunately for tbe American
consumer, Honda was not fazed by
such rhetoric. Its 1977 Civic, with
no catalytic converter, took first
place
in
the EPA's annual mileage
test, acbieving over 50 miles per
gallon on tbe highway. Right be–
hind it
in
fourth place in the stand–
ings was its bigger brother, the
Accord, of which
Motor Trend
magazine wrote in 1976:
"It
may
be the best automotive bargain
ever."
the major oil companies, who were
primarily interested in maintain–
ing petroleum prices at a stable
Jevel.
Cartel-like arrangements didn't
stop with the domestic American
market either. In 1927 the heads of
the big three of the oil world at that
time-Shell. Standard of New Jersey
and Anglo-Persian- met at Achna–
carry. Scotland, and established
what was later known as the "as is"
agreement. The three agreed to
maintain oil prices at the level de–
termined by the cost of producing
oil in Texas.
Stability in price structure a lso
meant each major oil company
would by agreement limit or pro-
rate the amount of oil supplied to
world markets. This policy worked
wonders for oil company profits. but
it was not exactly designed to max–
imize the revenues going to the pro–
ducing nations, especially those in
the Middle East On many occa–
sions the major oil companies would
deliberately limit the flow of oil
from a host country despite re–
peated requests to the conlrary.
Middle Eastern nalions were also
shortchanged in other ways. Dirt–
cheap oi l that might cost a nickel or
dime per barrel lO produce in the
Middle East was sold elsewhere at
prevailing market prices governed
by much more expensive Texas oil.
This scheme added to the major oil
companies' profits and at the same
time minimized the royalties going
to the producing countries.
Requests for increased participa–
tion by lhe producing countries also
invariably mel with unyielding re–
sistance. By today's standards. ask–
ing for the appoinlmenl of executive
directors or preference in purchas–
ing company stock would seem
quite reasonable. But the majors
were afraid thal once they allowed
one country to participale, all the
others would demand equal treat–
ment. Such "boneheaded inflex–
ibility," as one author described it.
was bound to stir up resentment
among the Persian Gulfslates.
The United States' oil import
quota was another device that
tended to further aliena te Middle
Eastern countries. lt was justified in
the name of national security, but it
was really designed to protect
American refiners from having to
compete with cheaper imported oil.
Because of such one-sided policies.
one oil minister was moved to make
this plea to the West in 1963: "Try
at least
10
behave in good failh. You
take a malicious pleasure in mis–
leading us. and in depriving us of
our legitimate rights. In the minds
of the people, all this may finally
rebound against you, against the
principies of whal is called 'the Free
World'"
(Power Play,
p. 286).
The straw that finally broke the
back of the majors' monopoly was
Exxon's unilateral cut of the posled
price of oil in 1960. This precipilous
move rippled lhrough the producing
nations like a shock wave and led to
The
PLAIN TRUTH February 1978