Energy: The Uranium Cartel's Fallout

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What influence the cartel may have had on American prices is hard to establish. The group's operations excluded the U.S., which maintained an import ban on foreign uranium fuel until the first of this year. The ban is now being gradually phased out. Nonetheless, many American uranium producers keyed their prices to world prices that Gulfs opponents charge were at least heavily influenced by the cartel.

According to Gulf, prices in the U.S. were driven up in large part not by the cartel but by its legal opponent, Westinghouse. To increase sales of its nuclear reactors, Westinghouse offered purchasers longterm, low-cost supplies of uranium fuel, though it did not own the uranium; for a time it scrambled to buy yellowcake wherever possible, and its purchases helped to lift the price. Gulf Chairman Jerry McAfee says sarcastically: "The company sold short some 60 million pounds of uranium and now is attempting to win court sanction for breaking its commitments. I think they are entitled to the same right that any commodity speculator enjoys when he has badly misjudged the market"—presumably meaning the right to go broke.

Whatever the courts rule, the cartel's shenanigans are certain to refuel congressional demands that the nation's oil companies divest themselves of their nonpetroleum activities. At the least, the trials will give yet more ammunition to oil-industry critics who charge that some of the world's largest and most powerful corporations think they have become a law unto themselves.