Midas

But it had to. It had to. .

Go slowly, he told himself.

Think clearly. Everything has a reason.

Just get to the next plateau.

It had to fit. .

Millions of acres unavailable for oil drilling.

He began scribbling furiously on the pad.

What was the result of that decision? Environmentalists were thrilled. The permanent preservation of land and wildlife. Possible political gain, a nod to a constituency that wouldn’t normally vote for Dandridge.

What else? The oil companies were up in arms. Less drilling. Less potential for domestic oil. More dependence on overseas oil.

So what? So what? What did it mean?!

Less oil, prices go up. .

Higher prices were bad for the administration. It was harmful to their normal constituents, which meant it was politically damaging. .

But when oil prices rose, someone was making a lot more money.

Bad politically. Very good personally.

He remembered Roger Mallone, lecturing him in the living room of his East End house. “SPEs,” he’d said. “A great way to hide a lot of crooked things.”

EGenco. Midas. Special Purpose Entities.

He jumped up and ran out to the front lawn. His newspapers had never stopped being delivered, and he scrounged through the several dozen papers that were scattered around, found that morning’s New York Times. Justin turned to the business section, found that day’s oil prices.

Sixty-four dollars a barrel. A record high.

Justin swore at the guys who’d stolen his computer-he no longer had access to his computerized address book-then called Rhode Island information, asking for the number for Roger Mallone. A minute later, he had Mallone on the phone.

“Jay, Jesus Christ, what the hell’s been going on? Are you all right?”

“Roger, I don’t have time to explain. I need some information and I need it now.”

“All right, all right. Go ahead.”

“EGenco. Remember we were talking about their Special Purpose Entities?”

“Sure.”

“Well, what kind of entities would they be likely to set up?”

“Depends on who they were being set up for.”

“Government officials. High-up government officials. And Saudis. A combination of the two.”

“That doesn’t narrow it down much.”

“Okay,” Justin said. “Go with me for a second, Roger. Is it possible that oil prices could be manipulated-”

“What, to go down? You mean to help these guys win the next election? Sure. There’s been a lot of speculation that, when the time comes, that’s what’s going to happen-”

“No. To go up. How could the partners in a company benefit if oil prices go way up?”

“Are you kidding? If you’re a supplier, you make a fortune.”

“Tell me.”

“Well, several ways. A company like EGenco has the government contacts to get huge contracts to rebuild Iraq and Afghanistan and anyplace else over there we might invade.”

“Keep going.”

“So they have to provide oil and fuel to rebuild the factories and infrastructures there. If oil prices go up, the government has to pay more. The company could make tens of billions of dollars extra.”

“Okay, that’s the company as a whole. How about something smaller? An SPE now.”

“Well. . you mean if I were being really devious about this?”

“Be as devious as you possibly can.”

“Well. . a company like EGenco doesn’t really explore anymore. They’re so big, they’re in so many other areas, it’s not cost-effective for them. So what they do is they buy from small and medium companies. If they wanted to, they could set up an SPE that’s a small or midsize oil drilling company. If they had to, they could justify it legally by saying that they’re taking a percentage of the findings, which they would-probably fifteen to twenty percent. Then the company-and the partners set up in the SPE-take the other eighty to eighty-five percent of the profit.”

“What kind of profit are we talking about?”

“Well, the partners’ve got to put up some dough, but it’s something relatively minimal. The way it works, when it’s really sleazy, is guaranteed money up front. That’s the suspicion about Dandridge right now, that’s where some of the lawsuits are headed, and it’s why people think he’s being so secretive. He could have put up a million bucks and gotten a deal where his share of the SPE guarantees him ten million-no matter what the SPE’s profits are. In exchange, he arranges the sweetheart deal for EGenco to rebuild the Middle East for billions and billions. That kind of shit goes on all the time.”

“Now let’s say the partners also want the SPE to be profitable, over and above that guarantee. What kind of money could we be talking about for a midsize oil exploration company?”

“If oil prices go up? Huge. Let’s say EGenco says, ‘You put up a million bucks each to be a partner.’ The Saudis generate about eight million barrels of oil per day. Three years ago the price of oil was twenty bucks a barrel. Now it’s sixty-two, sixty-three, or some unbelievable thing. So their gross has gone up from about a hundred and sixty million a day to around five hundred a day.”

“Five hundred million dollars a day?”

“Hey, it’s why it’s nice to be a Saudi royal. You pick up a nice chunk of change from that.”

“Three years ago it was almost a third of what it is now,” Justin said. “That was around the time of Dandridge’s big secret energy conference.”

“You got it.”

Justin shook his head in amazement. “How about a medium-sized American company?”

“Well, if EGenco puts these guys in a midsize company that’s working, that’s a success, that kind of company can generate about a hundred thousand barrels per day.”

“Which they’re selling for sixty-plus dollars a barrel.”

“Yup. Comes out to six million dollars a day. Of course, that’s not profit. EGenco takes their percentage, there’s operating costs. .”

“You know what, Roger? It’s still a shitload of money left over.”

“No question about that.”

“And one more thing: give me a simple rule of thumb about how to manipulate oil prices.”

“It’s actually pretty easy. Especially if you’re someone like Dandridge where everyone would expect him to manipulate downward to benefit the administration and make himself look good politically.”

“Well, explain it to me both ways, up and down.”

“There’s just one way, Jay. Once you have production in place, there are only two components: volume and price. The more volume, the lower the price. It’s just simple supply and demand. Less volume, the more people have to pay. And vice versa.”

“And the way you alter the volume?”

“You lower the number of producers and producing sources. If you want to be really paranoid, you can say we blew up Iraqi oil wells in the various Gulf wars so the Saudis got a bigger share of production.”

“How about declaring oil-producing land off-limits to drillers?”

“You mean American land? Sure. Anything that limits production is going to raise prices. You know, you’re starting to scare me, Jay. This doesn’t sound so hypothetical.”

“Do me a favor, Roger. Call my folks and tell them I’m okay. Tell them I’ll call them as soon as I can.”

“Want me to wish ’em a Merry Christmas for you?”