Big Oil’s Plans for Bigger Prices

While consumers are worried about today’s high energy prices, the giant oil industry cartel is planning for tomorrow’s price spiral by moving to control all energy sources.

Already in control of natural gas, which comprises nearly a third of U.S. energy consumption, the oil companies dominate over half of the uranium reserves and twenty percent of total coal production. Oil companies own or control thirty five percent of the coal production of the fifteen largest coal companies. They also own or lease huge coal reserves. Exxon boasts of its increasing manufacturing role in nuclear power plant equipment.

Several years ago, oil companies began describing themselves as “energy companies.” The “total energy” concept is rooted in a meticulously considered strategy to make sure that less expensive forms of energy do not upset the cartelized price of oil. The way to do this, industry executive reasoned, is to control these other forms of energy such as coal and raise their prices. In the nineteen sixties, under the accommodating climate of the Justice Department’s antitrust division, big oil began buying faster into big coal.

The rocketing price of coal has been largely ignored in the past two years. The Tennessee Valley Authority recently signed a coal purchasing contract at prices more than two and a half times the price in 1972. A recent Library of Congress memorandum estimates that the October 1974 price of “steam coal” more than doubled over the 1973 full year average price of$9.01 per ton. It projects an additional $4.4 billion price rise between October 1974 and October 1975 for coal boiler fuel users.

The same memorandum referred to “oil’s energy price lead­ership which has caused increases in the price of other energy resources. As a result, coal and intra-state natural gas prices have risen markedly.”

Why should higher oil prices on the world market raise the price of less expensive forms of energy such as coal and gas on the domestic market? The answer is control by the Exxons and Texacos, the Gulfs and Mobils, the Arcos, the Shells and the California Standards. Their relentless strategy is to raise the price of cheaper energy to the level of the most expensive energy sources–both of which they control. This explains their pressure in Congress–unsuccessful this year–to end the two decades of price control over interstate natural gas so that such gas will triple in price within a year.

It is important to remember that OPEC was provoked into being by these giant multinational oil companies.

Some fifteen years ago, these companies uniformly cut their price paid to the oil producing companies from an existing low level to an absurdly lower one. The countries learned their lesson and began the formation of the OPEC bloc. Did the big oil companies suffer? No, indeed, they profited even more and the consumers paid their bills.

Now a shocking takeover of geothermal resources in the western United States by the oil industry is rapidly mountingwith the support of the U.S. Bureau of Land Management in the Department of Interior. Hot steam and hot water is being found deep underground in increasingly large amounts in California and neighboring states. Quickly the oil companies are buying or leasing private lands and successfully bidding for leases to large tracts on federal lands.

Pacific Gas and Electric buys geothermal energy from a Union Oil-dominated consortium to provide substantial amounts of San Francisco’s electricity. In its contract with PG&E, Union Oil boldly pegs the price of the steam to the cost of oil and gas used the previous year. So as the price of oil climbs, the escalator clause raises the price of geothermal regardless of its cost of production. San Francisco consumers pay.

How much more evidence in Congressional hearings is needed, how many billions of dollars must be looted, how many more economic disruptions must be tolerated before the Justice Department moves under the old fashioned anti-monopoly laws to divest the oil industry of its control of other forms of energy.

A few hours before he left office this month, Senator Howard M. Metzenbaum (D.-Ohio) sent a letter to President Ford asking him to give such divestiture a national priority in the fight for a just economy. Competition between different forms of energy brings consumer prices down.