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Ralph Nader > In the Public Interest > Current Trends in the Oil Business

On March 14, 1980, John Swearingen, chairman of the board of Standard Oil of Indiana (AMOCO), had this exchange on the Phil Donahue show:

Donahue: You know, one of the biggest misgivings people have, I think, about the oil companies is that you appear to make more money every time OPEC raises its price. You benefit from the OPEC monopoly.

Swearingen : Yes, we do.

Donahue: Doesn’t that make you feel just a little guilty?

Swearingen: No, it doesn’t. I’m delighted that we can find additional oil any place in the world that will add to the supplies in this country.

On July 11, 1979, during the time of sudden gasoline shortages, Clifford C. Garvin, chairman of the board of Exxon Corp., said the following on the Donahue show: “Now, the oil companies are definitely profiting in a worldwide sense because of the shortage of oil. Prices have gone up; margins have gone up. That’s the way our system has been. The question you need to ask yourself is — are those profits exorbitant? Are they excessive?”

Garven and Swearingen obviously did not believe their companies’ last year’s profits to be excessive. Now, Exxon and Standard of Indiana reported first-quarter profits for this year. Exxon profits rose 102 percent to a world corporate record total of $1.925 billion over a near 90-day period. Indiana Standard rose 64.5 percent in the same period. Texaco reported an increase of 97.6 percent.

Oil industry executives say that these staggering profits are necessary to expand production of oil in this country. Yet new oil and gas prices at the wellhead have increased tenfold since 1972 and production has not increased. In fact, the country’s reliance on foreign oil imported by the Exxons, Shells and Texacos has grown in this period even while overall consumption has declined in the past two years. And oil companies still are searching for billion-dollar non-energy companies like Montgomery Ward — “Mobile” — to buy up with their swollen profits.

Energy prices are the main push for the economy’s rocketing inflation. And consumers are seeing only the beginning of what they will be forced to pay unless they organize to have a say on energy policy. Economist Lester Brown of Worldwatch Institute predicts that “by the end of 1981, the price of gasoline will almost certainly be moving toward $3 per gallon.” That means heating oil will be close behind that level. Also, natural gas prices will zoom higher as federal price controls are lifted.

Who is responsible for this greatest consumer plunder in U.S. history? First the oil companies who work with and profit from OPEC to such a degree that they demanded and received from President Carter.

Americans have to pay OPEC prices for Alaskan oil produced under the American flag and, by law, salable only to U.S. customers.

The large oil companies have no desire or intention to make this country self-sufficient in energy, not­withstanding what their advertisements trumpet. For self-sufficiency would mean the end of pegging U.S. oil and gas to the OPEC cartel and the collapse of the oil companies’ prices. The multinational oil companies profit most when the United States is reliant on im­ported oil and, if permitted, they will keep the United States in such a dependent state.

So far, Carter and Congress have abdicated their authority to defend the American people from this gigantic gouge. Our national capital is marinated in oil lobbyists and campaign contributions. To make matters worse, Carter and Congress are about to complete legislation that will provide billions of taxpayers’ dollars to the energy monopolies for the synthetic fuels boondoggle repeatedly condemned by liberal and conservative economists alike.

Government regulations over the oil industry repeatedly are violated and incur so little law en­forcement that the Department of Energy’s inspector general is about to quit in frustration.

The oil moguls believe they have broken both the resistance of Washington and consumers. But the tide can be reversed. If families and other consumers would informally get together in their neighborhoods and form energy action councils to advance their demands on their congresspersons and senators, change would follow. About a third of Congress already is willing to back a comprehensive consumers energy program but, ironic as it may appear, even this progressive segment is waiting for leadership to emerge at the grass roots.

If people in their communities just started these councils with an attitude of “doing our part,” the arithmetic of similar efforts around the country would add up to a real movement.

For further details on this suggestion, write to Nancy Drabble, P.O. Box 19404, Washington, D.C. 20036.