Understanding Oil

Crude oil is in the news.  This time, it is because the price is at an historic low and appears to be heading even lower.  Over the past few months, I can’t count the number of times I have read or heard various people offering expert analysis of what this means and what we can expect.  Sadly, most of them clearly have no idea how the oil industry works or the complex way in which technological innovations such as shale oil (or light-tight oil) and tar sands oil are changing the fundamentals of oil markets.  Without understanding the economic basis of the oil industry and how it is changing, there is no way anyone can hope to project what the future holds in store.  So, here is my (hopefully simple and readable) primer on the oil industry intended to help non-experts understand the forces at play.

First, a few caveats.  In this post, I am only looking at crude oil.  That is both because it is crude oil prices that are discussed most often and because this explanation would become lengthy if I attempted to also cover the wide range of rules, geographic factors, market forces and taxes that complicate the relationship between the price of crude oil and the price of gasoline at the pump.  Just understanding crude oil markets should help to understand the risks the world economy faces of the coming months.  Second, I am not addressing the added complexities added by the global effort to combat human-induced climate change.  Instead, I am just looking at how technological changes and economic realities are interacting to create new uncertainties.

The Oil Industry in Just Two Easy Steps

While extracting oil from the earth is an incredibly complex engineering and financial undertaking and almost every oil well could be considered unique, it is actually possible to conceptualize the whole process of consisting of just two simple economic costs.

1) Fixed Costs:  These are the costs of finding oil, drilling wells, setting up a field operation, establishing facilities to do basic things to the oil (such as separating it from the water and natural gas that are frequently present) and – of course – doing the paperwork to get permits, etc.

2) Marginal Production Costs:  These are the costs that go into pumping (or squeezing) out each barrel of oil once all of the fixed costs have already been made.  Marginal production costs include workers’ salaries, fees or royalties paid to land owners or governments, maintenance, the energy to run the operation, etc.

Producing Oil the Traditional Way

For the past 100 years of more, developing a new oil field has been extraordinarily expensive.  The cost of finding oil, drilling lots of holes (only a minority of which produce oil) and installing massive machinery to support the whole process can cost billions or even tens of billions of dollars.  All that money has to be spent before the first barrel of oil is sold.  In some oil fields, such as Kazakhstan’s mammoth Kashagan field in the Caspian Sea or Brazil’s massive Libra oil field, this fixed investment cost exceeds $100 or even $150 billion dollars.  When divided by the number of barrels of oil that investors expect to produce from those fields and discounted for the time value of money, that means that the fixed cost alone for developing these fields is likely to exceed $50 or even $75 a barrel.  Those are just the fixed costs; the marginal production costs for those fields will drive the total cost to produce each barrel even higher.  Needless to say, now is not a good time to be an investor in one of those megaprojects.

While the Kashagan and Libra oil fields are extreme examples, it is not uncommon for the fixed costs of developing a major oil field to represent 40% to 60% of the total cost of producing crude oil.  This is one of the reason why so much oil is produced by gigantic oil companies.  Who else has tens of billions of dollars that they are willing to invest in a project with a 20- or even 40-year payback period?

Marginal Production Costs Drive Production Decisions

No matter how expensive it is to develop an oil field, once it is operational fixed costs take a backseat to marginal production costs in decisions over when to produce oil.  This is because once an oil field is developed, all of the fixed costs become what economists call “sunk costs,” meaning that investors cannot recoup them by any method other than operating the oil field.

To understand this in practice, imagine yourself as the owner of a large, traditional oil field with an expected 40-year lifespan.  Let’s assume that you are not a multi-billionaire and thus had to borrow heavily to develop your oil field.  Your fixed costs for developing this field were high enough that you calculate that loan payments would equal $40 for every barrel you expect to produce.  Now that you have invested all that money, however, the marginal production cost of operating and maintaining the oil field is only about $15 a barrel.  When oil was selling for $100 a barrel, you were happy and rich!  Now that oil is $30 a barrel, however, what do you do?

If you stop pumping oil, you have zero income with which to make your loan payments and you lose everything.  Not good.

If you continue to pump, you will lose money on every barrel you sell.  Nonetheless, the $30 market price is enough keep the field operating and you will even have another $15 available to make at least partial payments on your loans.  It will take some tough negotiations with your creditors, but they are likely to conclude that $15 a barrel in loan payments is better than nothing.  Plus, if you can keep operating through this period of historically low oil prices then you’ll be in a good position to reap high profits – and make high loan payments – once oil prices recover.

Real world examples are more complicated, but the same underlying logic continues to work.  Economics dictates that oil companies will continue to pump oil as long as the price they receive is higher than their marginal production costs, even when they are losing money on every barrel once fixed costs are added to the equation.  In the real world, most producers actually keep producing oil (for a time, at least) even if the price they receive for their crude is less than marginal production costs.  This happens for a couple of reasons.   In the real world, costs don’t drop to zero just because production ceases.  Unless an oil company is ready to abandon an oil field entirely, and therefore abandon all of the massive fixed costs tied up in that field, the company will need to keep a certain number of staff on the payroll, do routine maintenance to keep equipment from rusting from disuse, etc.  The geology of oil production also serves to encourage oil companies to keep pumping even when they lose money on every barrel.  Crude oil does not occur in huge underground lakes of liquid oil.  Instead, it is trapped in rock formations such as sandstone or, more commonly, various carbonite structures.  Once production starts, a combination of natural and man-made forces cause the oil in the rock to migrate toward the wells so it can be pumped out.  If the tap is turned off and production suddenly stops, however, the oil will migrate elsewhere or bond to the rocks.  In either case, the total number of barrels that can be recovered from an oil field can actually decline just because the tap was turned off when it should not have been.  That loss in potential production can represent a huge economic loss, and thus serves as a strong incentive for keeping oil fields pumping even when they lose money.

For these economic and geological reasons, oil producers are loathe to stop producing oil just because they are losing money in the short term.  As long as they believe that the price of the crude oil they produce will eventually rise to profitable levels, they will do everything in their power to keep pumping during periods of low prices.  This is why world oil production does not fall precipitously every time oil prices fall.

New Production Technologies Turn Old Wisdom on its Head

Everything I have said thus far pertains to “traditional” oil wells.  These oil wells are characterized by huge up-front fixed costs and long production life times of 20, 40 or even 100 years.  Nearly all of the remarkable rise in U.S. oil production over the past 10 years comes from a new generation of oil fields that produce crude oil either from shale or other sources that were not considered feasible to develop just a generation ago.  Taken together, these new sources of oil are commonly referred to as “light tight oil.”  It is “tight” because it is more thoroughly trapped than traditional oil and thus takes a lot of energy and technology to get out.  It is “light” because the process of freeing the oil from its rocky prison results in very light rather than heavy oil.

Compared to traditional oil fields, a much lower portion of total costs for light tight oil comes in the form of fixed costs.  Instead, fixed costs tend to be more modest while marginal production costs are quite high.  When you hear in the news that the cost of producing oil from a certain light tight oil field is $60 a barrel, it is a good bet that most of that is composed of the marginal production costs of cooking and squeezing the oil out of the shale or other rock and a somewhat smaller portion is attributable to the fixed costs of developing the well.  Another big difference between the majority of traditional oil wells and light tight oil production is their productive liefspans.  While a traditional oil well typically produces oil for 20 years or more, many light tight oil facilities have a prime productive lifetime of only 18 months or two years.  The wells may be operated after that, but production typically declines considerably after that first, short period of production.  To keep production up, oil companies simply have to develop more and more wells.

Putting it all together, “traditional oil” is characterized by big up-front investments, long project lifetimes and relatively low marginal production costs.  Light tight oil, in contrast, has the opposite characteristics: more modest up-front costs, higher operating costs and shorter lifetimes.  Another way to think of this dichotomy is to imagine two ways of producing one hundred thousand barrels of oil a day for thirty years.  The traditional method would be to find a large oil field, invest billions of dollars to develop it, and then produce oil from that field for 30 years.  The method for producing that same quantity of light tight oil would be to develop dozens or even hundreds of small oil projects to reach your goal of 100,000 barrels a day and then to continuously develop more and more new ones to take over as production from the completed wells declines.

What This Means for Oil Markets and Prices

Analysts familiar with only parts of the overall picture often draw incorrect conclusions.  Anyone predicting multiple years of historically low oil prices is likely forgetting that light tight oil from the U.S. has been the largest source of new oil entering the markets over the past several years.  While many or perhaps even most light tight oil wells that have already been completed will continue to produce even if oil prices are low, oil producers are unlikely to continue investing in new projects unless oil prices rise to at least $50 a barrel.  Even at $50, many light tight oil plays (as the industry calls them) won’t be developed because the cost of production can run to $60 or even $80 a barrel.  Remembering that the majority of existing light tight oil wells will decline to very small production levels within the next 18 months, the decline in U.S. production could come quite quickly.

Similarly, anyone who points to the precipitous decline in investment into new light tight oil wells that has occurred over the past year as “proof” that the age of light tight oil is drawing to a close is ignoring economic realities.  As production from light tight oil wells declines, the U.S. will need to import millions of barrels of day more crude oil, thus driving up world crude prices.  Once crude prices rise, investment in light tight oil will resume.  It is the classic “supply and demand” model of economics.

Life in the Fast Lane

The long lead times, high up-front investment costs and long production lifetimes of traditional oil fields served as a type of brake on market volatility.  Absent a sudden disruption caused by war or a major natural disaster, market and geological realities meant that oil production moved up and down relatively slowly.  While natural and political disasters did cause periodic disruptions, those were the exception rather than the rule.

While light tight oil cannot be developed instantly, compared to traditional oil it is a veritable speedster that has reduced project lifecycles from a few generations to a few years.  For that reason, it has introduced a new element of volatility.  Now that the technology is more well understood, when prices are high investment is likely to flow in rapidly and production to surge even more rapidly than we have witnessed over the past five years.  When prices drop, however, investment will fall just as rapidly with production declines only a year or two behind.

This means that world oil markets will be more volatile in the future than they have been in the past.  Rapid boom-and-bust cycles are a real possibility.  Those cycles could be highly disruptive.  For the foreseeable future, for example, the biggest physical constraint on the rapid development of light tight oil is not geology or engineering but manpower.  As the Dakotas have already seen, the huge demand for labor to constantly drill new wells can reshape a state’s economy almost overnight – both when the demand rapidly appears and again when it disappears.  Huge problems can develop during both halves of the boom-and-bust cycle.

In the past, huge low-cost producers such as Saudi Arabia could play a role in maintaining market discipline among oil OPEC-affiliated and even some non-OPEC producers.  It did this by opening its own oil taps wide as a means of “punishing” countries that produced more than their quota or who were seen by Saudi Arabia as destabilizing markets.  Yes, Saudi Arabia lost money every time it did this, but its low cost of production meant that it could survive low oil prices better than most other countries.  It is difficult to predict how effective this strategy will be in the future.  Saudi Arabia’s game plan worked well as long as other producers had long-term investments at stake and thus shared Saudi Arabia’s desire for a degree of price predictability.  The gambit was further helped by the rather limited number of very large oil producers.  Because light tight oil production depends on the relatively short-term investment decisions of literally thousands of individual producers, “policing” this new class of oil producers is likely to prove extremely difficult.

What’s the Answer?

If you have read this far, you may be hoping to find “the answer” about oil prices.  Sorry, I don’t have it.  I do not know how long historically low oil prices will continue.  I only know that they cannot stay for more than a few years.  Falling investment in light tight oil, particularly when coupled with rising demand in India, China, SE Asia and elsewhere, mean that prices will rise.  Unfortunately, I do not know how quickly or how high they will rise.  There simply is not enough historical data to predict with any confidence what this newly emerging mix of production methods will mean for prices.  The only prediction with which I feel comfortable is that oil prices are going to be more volatile in the future than they were in the past and that this volatility will result in a wide range of economic and social disruptions.


The Curious Question of Who Can Be President

Ted Cruz’s candidacy is once again causing the question of just who is eligible to become President of the United States to appear in the media.  To help frame this question for anyone who is genuinely interested in the complex legal issues at play, I’ll provide a brief summary of the Byzantine, internally-inconsistent and constantly changing mess that is American citizenship law.

Before I begin, let me say three things up front.  First, I am not a Ted Cruz supporter.  Secondly, my own analysis of the issue leads me to believe that Ted Cruz is almost certainly eligible to become President.  I am not a lawyer, but I was a trained U.S. Consular Officer for many years during a period when Consular Officers were expected to be able to cite chapter and verse of relevant citizenship laws, regulation and procedures.  I do not support Mr. Cruz, but I certainly do not doubt his eligibility to become President.  Thirdly– and most importantly – anyone who purports to have the definitive answer as to Mr. Cruz’s eligibility falls within my definition of  spin-doctors propgating “lies and damn lies” because there is no definitive answer.  That answer can only come from the court system, perhaps even the Supreme Court itself, and federal courts will not entertain hypothetical cases.  We will only have the final answer if Mr. Cruz, or some future candidate born outside the USA, is elected President.

For a formal yet succinct explanation of why there is no definitive answer to the question of whether Ted Cruz is eligible to become President of the United States, I turned to the Foreign Affairs Manual (the FAM), a massive, dense and often incomprehensible set of rules and guidelines that were created to translate literally thousands of (often inconsistent if not contradictory) U.S. laws and regulations into one comprehensive manual that governs the day-to-day operation of civilian American government operations abroad.    According to Section 1131.6-2, subparagraph a, of the seventh volume of the Foreign Affairs Manual (usually cited as 7 FAM 1131.6-2a), “[i]t has never been determined definitively by a court whether a person who acquired U.S. citizenship by birth abroad to U.S. citizens is a natural-born citizen within the meaning of Article II of the Constitution and, therefore, eligible for the Presidency.”  Just in case anyone is tempted to read nefarious political intentions into that language, it is worth noting that that particular section of the FAM has not changed since April 1, 1998, so it could not possibly have been written with any current Presidential candidate in mind.

Why is This Question So Complicated?

The question of who is eligible to become President of the United States is complex for two primary reasons.  First, the Constitution is unclear.  Section 1 of Article Two, Clause 5 of the U.S. Constitution states:  “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President […].”  That is the only place that the term “natural born Citizen” appears in the Constitution, so it has been up to the Congress and the courts to determine what the words mean.

Second, both Congress and the courts have changed their mind many times over the course of U.S. history and have used all types of confusing language.  While some citizenship laws included language making them retroactive, others applied only to persons born after the law was passed.  It is therefore possible (although I am not sure if it ever really happened) for identical twins who were born just before and just after midnight on a date when the law changed to have different citizenship status.

Starting with the basics, there are three ways to become a U.S. citizen today: (1) being born in the United States, (2) being born outside the United States to parent(s) who are U.S. citizens, or (3) being naturalized at some point after birth.  Each of these three paths to citizenship has its own peculiarities that could impact the ability of a person to be considered a “natural born citizen” for the purpose of becoming President.

The Easiest Cases First: Naturalized Citizens

Of the three routes to becoming a U.S. citizen, the easiest one to understand is the third: naturalization.  Lawmakers, lawyers and courts are in almost universal agreement that persons who became a U.S. citizen via naturalization are not “natural born citizens” and thus cannot become President of the United States.

Even for naturalized citizens, however, the situation may not be set in stone.  A potential ambiguity arises because over the long history of frequently-changing U.S. citizenship law, the Congress has, in some but not all citizenship laws, included language stating that persons who became U.S. citizens under the provisions of such-and-such law are “considered natural born citizens.”  While Congress has not yet used that language in any law governing naturalized citizens, the fact that it has used such language in laws governing the citizenship of persons born overseas to one or two American citizen parents has led various legal experts to opine that Congress could pass a law with a similar provision for some group of naturalized citizens.  This possibility attracted some attention in 2013 when the Austrian-born actor and former Governor of California, Arnold Schwarzenegger, was reportedly considering (or being urged to consider) a run for the presidency.

Persons Born in the United States: Not as Simple as You May Think

With very few exceptions, legal experts agree that anyone born in the United States is a natural born American citizen.  While the actual legal situation is not as simple as most people believe, the fact is that more that 99.9% of persons born in the USA over the past 70 years are citizens by birth.  If anyone who fell into the remaining 0.1% decided to run for President, the case would almost certainly have to be decided by the courts.  The same would probably be true if someone over 70 who fell into racial or ethnic groups previously subject to discriminatory “exclusion” laws were to run for President.

The primary exception to the general rule that persons born in the USA are natural born citizens of the USA concerns children born to diplomatic staff and their spouses. Children born in the USA to parents who are duly accredited foreign diplomats on assignment to the United States do not become U.S. citizens at birth.  Interestingly, the same exclusion generally does not apply to children born to foreign consular officials working here.  This distinction arises due to the varying level of immunity diplomats and consular officers receive.  Diplomatic immunity is so extensive that children born to foreign diplomats are viewed as not being subject to U.S. law and, as such, do not meet the requirements for citizenship by birth as set out in the 14th Amendment and further defined in 8 U.S.C. § 1401.  Consular immunity is much more limited than diplomatic immunity, so children born in the USA to accredited foreign consular officials are usually considered American citizens.  The same is true for children born to support staff who are generally subject to U.S. laws even though they enjoy some level of administrative or “official acts” immunity in conjunction with their official functions.  Just in case someone feels that those rules are not complicated enough, rest assured that there are small numbers of other exceptions to the exceptions that have been created by laws and treaties, such as one between the USA and Canada concerning the citizenship of the children of consular officials born to parents from one country serving in the other.   The collection of laws and regulations is complicated enough that there is an office in the State Department that makes individual determinations for each and every child born to foreign diplomats, consular officials and other government representatives working in the USA.

Citizenship by birth has not always been nearly so universal.  For much of American history, laws passed by Congress, various state laws and a multitude of court rulings limited who could become a citizen by being born in the United States.  Among the most significant such provisions were those that denied citizenship to persons of African origin and those that denied citizenship to persons of Asian origin.  In 1857, for example, the majority opinion in the Supreme Court’s Dred Scott decision held that anyone whose origins could be traced to Africa could never be a citizen, even if the person or his/her parents came to the USA freely rather than as slaves and had lived here for generations.  While the prohibition against African-Americans being citizens was eliminated by the passage of the Civil Rights Act of 1866 and then the 14th Amendment in 1868, other exceptions lasted much longer.  Native Americans, for example, did not automatically become citizens at birth until 1924.  Many persons of Asian origin were prohibited from being citizens for any reason, including birth in the USA, due to a whole range of laws passed by Congress between the 1880’s and the 1930’s specifically targeting persons whose families came from China, Japan and other Asian countries.  Those exclusions were not lifted until the passage of the Magnuson Act in 1943, so it is theoretically possible that an Asian-American who was born in the USA prior to 1943 could be barred from becoming President.  I say “theoretically” because no such case has ever been decided by the courts so it is not yet 100% clear whether an American politician with Asian roots could successfully challenge the constitutionality of the law(s) that prohibited him/her from becoming a natural born citizen.

None of the exceptions described above apply to President Barack Obama, who was born in Hawaii in 1961, two years after it became a U.S. State.  While most proponents of the politically and racially charged “birther movement” asserted that President Obama was born outside the USA, those contentions were so obviously false that they never even reached a court.  Amid the easily discredited nonsense, however, one more nuanced legal argument did emerge.  The basis of that argument was that President Obama was not a “natural born citizen” despite the fact that he was born in the USA.  Central to the case was the contention that to be a “natural born citizen,” it was not enough to be born in the USA; both parents had to be Americans citizens as well.  While the case was decided in President Obama’s favor by the Court of Appeals in Indiana, the fact that a court even agreed to hear the case demonstrates that the question was worth thinking about, which is not surprising given that past Presidential candidates had been challenged on the same grounds.  In 1896, Christopher Schürmann’s inability to win the Labor Party nomination for President was largely attributed to concerns that his parents were both German citizens, a fact that (his opponents contended) would render Schürmann ineligible to serve as President even though Schürmann himself had clearly been born in the USA.  While the case never went to court, the charges nonetheless appear to have served their political purpose by sabotaging Schürmann’s candidacy.

Charles Evans Hughes managed to win the Republican nomination for President in 1916 despite concerns that the fact that both of his parents were British, and not American, could render him ineligible to become President.  Because Hughes lost to Woodrow Wilson, the question never made it to court.

It is hard to say for certain if there was ever a serious legal question as to whether someone born in the USA must also have two American citizen parents in order to be eligible to be President; it may have always been a political ploy.  In any event, thanks to the suit brought against President Obama in 2008, that question has now been settled.  To turn legalese into plain English, the court conclude that President Obama was born in Hawaii two years after Hawaii became a U.S. state, so he was born in the USA and is therefore a natural born citizen.  Period.  The citizenship of his parents is irrelevant.

The Really Tricky Question: Persons Born Outside the United States

The class of citizenship cases that is most complex includes the case of Republican Presidential contender Ted Cruz, who was born in Canada in 1970 to an American mother and Cuban father and who held dual U.S.-Canadian citizenship until 2014, when he formally renounced his Canadian citizenship. The fact that Mr. Cruz was elected to the U.S. Senate after having been born in Canada and while still holding Canadian citizenship did not raise any constitutional questions for the simple reason that the “natural born citizen” language of the U.S. Constitution refers exclusively to the President.

The question of whether someone born outside the United States can become President, even if he/she is born to two American citizen parents, has never been definitively decided.  This legal limbo persists despite the fact that the first citizenship law passed by Congress, the Naturalization Act of 1790, stated that “the children of citizens of the United States, that may be born beyond sea, or out of the limits of the United States, shall be considered as natural born citizens.”  (Emphasis added.)

That first citizenship law also included follow-on provisions that codified gender discrimination by denying citizenship to children born to American citizen mothers who gave birth after having married a foreigner who had never lived in the USA while granting citizenship to the children born to American men in analogous circumstances.  Yet another provision in early U.S. citizenship law reversed the tables somewhat by granting U.S. citizenship to children born overseas to unmarried American women but denying it to children born out of wedlock to American men.  Those 18th century citizenship laws established a legal precedent for official gender-based discrimination that continue to this day.  Driven by concerns that “fake” illegitimate children of American soldiers in Vietnam and Korea would claim an American father as a means of coming the USA, for example, Congress has made it much harder for the illegitimate children of American men resident abroad to be recognized as citizens than the illegitimate children of American women.

Despite these few continuing vestiges of gender-based citizenship law, by 1970, the year that Ted Cruz was born, U.S. citizenship law had evolved to the point where he clearly fell into the category of persons “considered as natural born citizens” even though only his mother was an American citizen at the time of his birth.  In 1970, the only way someone born outside the USA to a U.S. citizen mother could have been excluded from being “considered as a natural born citizen” would have been if his mother had also been born abroad and had not been physically present in the USA for more than five years, two of which had to be after her 14th birthday.  Because Mr. Cruz’s mother was born and grew up in the USA, that exclusion clearly does not pertain to him.

The Thin LIne Between Law and Politics

Despite the seeming clarity of Ted Cruz’s case – and my own opinions – I have to admit that his legal ability to become President of the United States is not 100% clear.  The most common argument against Ted Cruz’s eligibility centers on whether the term “considered as natural born citizen” is legally equivalent to “is a natural born citizen.”  This question was at the heart of Constitutional Law Professor Mary Brigid McManamon’s piece in the January 12 edition of the Washington Post.   Prof. McManamon concluded, in language construed to broke no argument, that Ted Cruz is not eligible to be President since the (implied or intended) Constitutional meaning of “natural born citizen” was “born in the USA.”  She only presented information that supports that view.  Just a week prior to when Prof. McManamon’s opinion piece appeared, however, Washington Post columnist Ruth Marcus, who is both a Pulitzer Prize winner and Harvard Law graduate, concluded in equally authoritative language that Ted Cruz clearly meets the constitutional requirements to be President.  Like McManamon, Ms. Marcus presented ony one side of the issue and did not address the counter-arguments.  Both of those eminent experts were wrong and for the same reason: they chose to present their own views as unassailable truths rather than opinion and to simply ignore all facts and opinions that did not support their chosen position.  While I agree with Ms. Marcus that Senator Cruz almost certainly meets the constitutional requirements to become President, I also realize that my beliefs do not matter.  As I noted at the start, what matters is how courts interpret both the Constitution and applicable citizenship laws — and the courts have not yet spoken.

Ted Cruz is not the first candidate born outside the USA to face scrutiny over his eligibility to become President.  The most recent similar cases involved Republican Presidential candidates George Romney and John McCain.  While he was born in Mexico rather than Canada, Mr. Romney’s legal citizenship status is somewhat similar to Mr. Cruz’s in that Mr. Romney clearly falls into the category of persons “considered to be natural born citizens” of the USA by virtue of being born to American citizen parents residing overseas.  Had he been elected, someone probably would have challenged Mr. Romney’s eligibility to become President, most likely with the result that the courts would rule in his favor.  But that’s just my opinion.

John McCain’s situation was somewhat more complex, primarily because he was born in 1936 and thus potentially could have come under the more restrictive version of citizenship law that was in effect at that time.  From 1795 until 1940, being born overseas to American parents did not automatically convey citizenship.  Instead, there were numerous (and changing) limitations on the citizenship of persons born overseas as well as tests to be met after birth.   Under the particular version of U.S. citizenship law in effect at the time of Mr. McCain’s birth in Panama, the key legal question was not only in which country he was born, but also in which hospital.  Under provisions specific to the Panama Canal Zone, persons born in a U.S. facility in the Canal Zone were “considered natural born citizens” while persons born in private facilities were not.  While Mr. McCain has always maintained that he was born in the U.S. military hospital, which certainly seems likely given that his grandfather was the base commander and his father was assigned to a submarine stationed at the U.S. base there, some of Senator McCain’s political opponents nonetheless tried to mount a challenge to his eligibility to become President.  In a bipartisan gesture, the U.S. Congress passed a non-binding resolution affirming that Senator McCain is a natural born American.  Despite this, if he had won the election there is a good chance that someone would have mounted a legal challenge to his eligibility to become President.  This challenge could have been based on the question of the exact hospital where he was born or on the broader question of whether persons “considered to be natural born citizens” according to laws passed by Congress meet the Constitutional definition of “natural born citizens.”  The arguments presented by Professor McManamon in the January 12 edition of the Washington Post would apply equally to both John McCain and Mitt Romney.

Claiming that political opponents are somehow ineligible to become President is nothing new.  The first “birther” movement arose with the election of President Chester A. Arthur in 1881.   In President Arthur’s case, this was due to the fact that his father was a traveling minister who served towns on both sides of the U.S.-Canada border.  President Arthur’s political opponents contended that he actually born on the Canadian side.  Because Arthur’s father was an Irish citizen at the time of Arthur’s birth in 1829 (or 1830), he would not have been a citizen at birth if he were born in Canada even though his mother was undeniably a natural born American citizen from Vermont.  While the challenge to Chester Arthur’s citizenship never reached federal court, it does provide an interesting insight into the how laws change over time.  If we assume solely for the sake of argument that Chester Arthur’s opponents were correct and he was born in Canada, then all that would separate Chester Arthur from Ted Cruz is the date of their birth.  Both had American mothers and foreign fathers.  When Chester Arthur was born, children born outside the USA to American citizen mothers and foreign fathers were not necessarily American citizens.  By the time Ted Cruz was born 140 years later, the law had changed so that he mother transmitted citizenship.  Because a number of Presidential candidates are proposing changes to U.S. citizenship law, including to birthright citizenship, the comparison of the cases of Ted Cruz and Chester Arthur may be more than just an historical mind game.

The Elephant in the Room

While I have tried to present a genuinely balanced, non-partisan analysis of the complex issues surrounding the question of who is eligible to become President of the United States, I cannot in good conscience end without addressing the proverbial “elephant in the room:” the anti-Obama “birther” movement.  This remains a topical issue because so many people still buy into the rhetoric.  A recent poll found that 53 percent of Republicans still doubt Obama’s citizenship. At the same time, an overwhelming 70 percent don’t have any doubt Cruz is American and eligible to be president.  In other words, 23% of Republicans profess to simultaneously holding not just inconsistent but diametrically opposing views.

First, I believe that no rational person can seriously doubt the fact that President Obama was born in Hawaii, a U.S. state.  Even if, however, someone lives is a “Man in the High Castle” style alternate reality in which history is totally rewritten and Barack Obama was born in Kenya and somehow transported (either by secret supersonic plane or even the TARDIS itself) to Hawaii to complete all requirements for a Certificate of Live Birth to be issued, then this fictional, alternate Obama would still be in exactly the same legal position as Ted Cruz.  Both men would have been born after 1952 and thus subject to the same set of citizenship requirements included in the amendments to the Immigration and Naturalization Act passed 1952.  Both men would have been born to U.S. citizen mothers who were themselves born in the USA.  Both men would have had non-citizen, foreign-born spouses.  So, I have to ask myself:  how is it possible for anyone – no matter how detached from reality their views on President Obama’s birth place may be – to consider Ted Cruz to be eligible to be President but not Barack Obama?  The sad reality is that millions of Americans evidently hold those utterly inconsistent views.  I cannot say if they are driven by ideology, racism or other base instincts.  What I can say for sure is that whatever is driving them is also blinding them to the inconsistency in their own beliefs.   That, unfortunately, is a very sad reality that makes me worry about the future of American politics.


Tempest in a Teabag

The latest Hillary Clinton “revelation” that Republicans and right-leaning pundits are shouting from the rooftops (and from every media outlet that will provide them an audience) is that Secretary Clinton instructed an aide to turn talking points from a classified cable into a nonpaper. According to the anti-Hillary crowd this incident provides clear proof that Mrs. Clinton instructed staff to violate secrecy rules and thereby endanger national security. That contention is utter nonsense, as anyone with even the slightest familiarity with the operation of American diplomacy would know. Transferring talking points into a nonpaper is completely normal and is probably done hundreds of times a day by American diplomats serving around the world.  If the so-called experts quoted in the press recently cared more about truth and less about scoring political points, they would have said so.

To understand what Secretary Clinton was doing and why it should be viewed as entirely normal requires only a small amount of “Diplomacy 101” background, starting with three key pieces of vocabulary.

“Talking Points” are a list of facts, policies or other information that U.S. officials can draw upon during meetings with foreign counterparts. Talking points range from the very specific to a simple tick-list of topics to cover. Most commonly for American diplomats serving overseas, those talking points originate in Washington, DC, and are intended for delivery to officials of the government of the country where the American diplomats are serving. At times, however, American diplomats are instructed to deliver talking points to people other than their host foreign government. Other audiences could include diplomatic colleagues from friendly nations assigned to the same foreign country, to non-governmental agencies, to public gatherings or even at press conferences. By their very nature, talking points are intended to be released to some foreign government(s), officials or potentially even to the public.

“Classified Cables” include all communications between the State Department and U.S. Diplomatic and Consular outposts that include at least some classified (Confidential, Secret, or Top Secret) information. If there is any classified information in a cable, the entire cable must be handled via channels and methods approved for classified national security information. While it may seem counter-intuitive, talking points and even press guidance intended for the widest possible public distribution frequently arrive within classified cables. This happens because the cable conveying the talking points may also contain sensitive or even highly classified background information for the American Ambassador and/or others at an overseas post. The talking points are intended to be conveyed to others outside the Embassy; the classified background information is not.

“Nonpapers” are a standard tool used by diplomats around the world. The term refers to any written communication that lists some pieces of information but contains no identifying marks as to the origin of the information or who conveyed it. The term “nonpaper” reflects the fact that the paper itself has no status as an official communication. Nonpapers are commonly left behind by diplomats delivering talking points as a courtesy so that the person on the receiving end of the exchange can listen rather than take notes. For this reason, it is extremely common practice for American diplomats serving abroad to take the talking points they have been instructed to deliver to a host government and turn them into a nonpaper.

Knowing just these three common diplomatic terms is enough to debunk all of the nonsense being brandied about by partisan hacks. When unable to receive a complete classified cable that likely included both classified background information that must be protected and talking points intended to be passed to a foreign interlocutor , Secretary Clinton instructed her staff to transfer the talking points only to a non-paper that she would read and potentially even leave with the foreign official(s) she would be meeting. It was, in all likelihood, the most normal request in the (diplomatic) world.

I am not saying that it was right for Secretary Clinton to use a personal email account for official business. I believe it was not.  More broadly, rules and accepted practices that allow political appointees to behave in ways that are forbidden for career staff are almost always counterproductive.  Downsides to making special exceptions to rules and regulations for political appointees range from decreased efficiency and loss of transparency to an increased likelihood of unethical behavior.  Such exceptions to established rules are, unfortunately, quite common; they did not start with Clinton or the Democratic Party, nor are they unique to the State Department or even the Executive Branch of government.  Some of the worst examples of abusing personal position I have ever witnessed were committted by members of Congress.  Former Secretary Clinton’s decision to use private email for official business is just one example of this genuinely bipartisan and long-standing policy failure.