Washington–An industry just isn’t with it these days if it cannot announce a “shortage.” Without a “shortage” there is no corporate chic. For how else can a self-respecting corporation, working with its confreres and trade association, get higher prices, weaken pollution standards, loosen antitrust constraints, drive small business out of business and demand even more tax privileges.
A few days ago I was talking with a publisher who was complaining about the paper shortage. He candidly acknowledged that the shortage was fabricated. It seemed that he went to his supplier–the paper mill–where a top executive told him that the plant could double its capacity but that it was making more money at half capacity. It was getting rid of its marginal customers, forcing other customers to buy the paper with the highest profit margins and luxuriating in the cozy fraternity of a paper industry long overdue for enforcement of the anti-monopoly laws. Displeased, the publisher returned to his office and satirically told his assistants: “Well, it looks like we’re going to have to fire some of our customers.”
The phony fuel shortage is already getting the big oil companies what they want in the United States–higher prices, skyrocketing profits, less competition from independent small refineries and gas stations if they’re still in business at all, lower pollution controls, pressure for de facto exemption from the antitrust laws and other entrenched powers. Mr. Nixon’s energy advisers, who get all their figures from the oil industry, are learning that they have been stampeded into a crisis giveaway response. Suddenly, they discover that 700,000 barrels of oil more a day are being imported than they figured. They learned that tankers and reserve tanks are filled to the gills in U.S. ports. They know that stockpiling and hoarding (of diesel fuel, for example) is going on by thesecompanies. They also know that any amount of oil is available “for a price,” that natural gas is being withheld from the market waiting for higher prices, and that tens of billions of barrels of oil remain untapped in exploited oil wells in the Southwest. Predictably, the Nixon men, led by energy czar William Simon, are determined to allow the domestic price of oil to go at least to $7.00 a barrel by early next year–up from $4.25 per barrel in early December.
These so-called public servants are either playing into the hands of the oil industry or are actually doing the industry’s job of gouging consumers mercilessly. Either way it doesn’t make much difference to workers and consumers who, as usual, will bear the brunt of the oil industry’s greed.
Mr. Simon has been told repeatedly by his energy conservation advisers that, even with the inflated prediction of an 18 percent energy shortage in the first quarter of 1974, simply cutting out the waste of energy in industry and commerce, together with voluntary consumer thrift, would make up more than that difference. Now the government is scaling down the extent of the energy shortage so fast, one can hardly keep track of the latest official mirage.
The shortage holdup is spreading like an epidemic by those industries who claim it and those industries who feed off it. The drug industry, wanting higher prices, warns of inadequate petroleum products for some of its drugs. The coal industry announces that it can produce much more coal but only if job safety and environment standards are weakened and windfall profits permitted. Few industries are now as profitable as coal but the quest for this brand of collective extortion is encouraged by collusive coal company behavior through the National Coal Association.
Monopolistic practices, industries dominated by a few corporate giants, business subsidies and tax privileges are producing the topsy turvy paradoxes that spell waste, consumer exploitation and the lack of new answers to our economy’s problems.
Here are a few of these paradoxes: (1) companies grow by buying (their competitors or other companies) instead of selling; (2) banks, insurance companies and now more industries are dumping what they call “marginal customers”; (3) consumers are asked to buyless gasoline and fuel and then told to pay more; (4) companies make more profit by limiting supplies; (5) corporate profits are at record levels, the balance of payments is markedly improving, real corporate taxes are proportionately lower than in many years, and yet the economy is in serious trouble; (6) companies such as the airlines, given routine cost-plus rate increases, engage in high cost-competition rather than price‑competition; (7) firms advertise “tax losses” they want to share; (8) the more electricity they companies devour the lower rates / receive in this period of supposed energy shortages; (9) rather than stiffening their resistance to their suppliers, companies find it so easy to transfer the costs of monopoly, waste and inefficiencies to the consumer.
These are symptoms and trends that are making the people get less and less value out of a bigger and bigger economy. What makes this happen? Decreasing competition, unorganized consumers, and a big business government.