The Price of Oil
What a week it has been for the giant oil companies! Billions in record quarterly profits rushing into their coffers. An even bigger round of quarterly profits coming up. Gargantuan executive pay bonanzas. And a pile of “forces beyond our control” excuses to publicize in response to the empty outrage of Washington politicians and the real squeeze on consumers and small businesses.
Oil man Bush, atop his administration marinated with ex-oil executives in high positions, keeps saying there is little he can do. It is the market of supply and demand. Only fuel cells and hydrogen sometime down the 21st-century road can save the country from dependency on foreign oil, he says repeatedly. Plus more drilling in the Arctic Wildlife Refuge.
The public heat about energy prices prodded Mr. Bush this week, however, to at least make a little change in rhetoric. He repeated his warning that his government will not tolerate any gouging. Yet the supine reporters did not ask him whether he has ever caught a gouger. But he did mumble something about higher fuel economy standards so that your car guzzles a little less gasoline. He said he will be meeting with the domestic auto company executives in the White House in mid-May. He praised ethanol again. He visited a gas station in Mississippi to feel the pain of the motorists.
Will Hollywood every leave Washington, DC?
On Capitol Hill — aka withering heights — the Republicans are starting to talk tough, mumbling about larger taxes on oil industry profits — an idea Bush said he would veto last year. The Democrats cannot even agree on an excess profits tax, preferring the greasy band-aid of lifting the 18.4 cent gasoline tax for sixty days. This new detour is pathetic since it takes the heat off the industry’s skyrocketing gasoline price which are well into the $3 to $4/gallon range in many places.
A few, very few members of Congress, like Senator Byron Dorgan (D — North Dakota) know what has to be done to this industry and its long-time grip over the federal government. First, the gouging profits must be recaptured and returned now to the consumer. The government must also invest in advanced public transit systems.
Big oil has been on a marriage binge and the mergers, including the wedding of Exxon (number one) and Mobil (number two), have tightened further the corporate cartel of oil as it feeds off the government producers’ cartel of oil abroad. Antitrust break up action is necessary.
The claim by the oil barons that they’re just responding to the marketplace of supply and demand is laughable. Why are they making double and triple profits? Why are their top executives tripling their own pay? Hard-pressed sellers of oil would not have such a luxurious profit and pay spiral. Hard-pressed sellers of oil would not have paid $144,000 every day to Exxon CEO, Lee Raymond since 1993 and then send him off with a $398 million retirement deal.
A competitive domestic oil industry would not be so able to close down scores of refineries and then turn “refinery shortages” into higher gas prices at the pump. Nor would competitive companies get away with a return on capital of 46 percent for upstream drilling and production operations, plus a 32 percent for refining and marketing. Washington Post business reporter, Steven Pearlstein, call these returns “hedge fund returns.” Except with hedge funds there is a risk of losing from time to time. Not so with the corporate government of Big Oil.
A President, preoccupied with his criminal, fabricated war in Iraq, would not leave Americans defenseless as oil prices eat into their family budgets. A standup President would order an all-fronts investigation of the oil industry’s pricing practices from the oil well to the gasoline station.
There would be full use of subpoenas and public testimony from the oil bosses under oath by his regulatory agencies. He would organize with his Republican majority in Congress a repeal of past and recent unconscionable tax breaks and stop giving away your oil on federal property in the Gulf of Mexico to the oil companies without any royalties. He would press for an excess-profits tax and legislation raising by statute the fuel efficiency performance for new motor vehicles, including SUVs, Minivans and light trucks.
A standup President would raise margin requirements to tone down the speculation in oil futures that are swelling the New York Mercantile Exchange and contributing to higher gasoline and heating oil prices. He would support tariffs on imported refinery products to push the companies to expand and build new cleaner refineries in the U.S. Where? In some of the exact locations where the oil industry shut down these refineries over the past thirty years to contract overall output and move operations to cheap labor locations abroad.
A standup President would give an address to the nation that mobilizes small and larger businesses which use oil to join with consumers in a common cause against the looming inflationary jolts that will raise prices for many regular products and lead to higher interest rates by the Federal Reserve.
Bush can never proactively do this for the American people who already by more than a 2 to 1 margin believe he cares more about the interests of Big Business than the interests of regular people.
But, mobilized small business can get him to relent and let some of these changes happen.
The small business revolt can start with several hundred economically squeezed truckers bringing their 18 wheelers to Washington in a protest that encircles in a wide arc the Congress and the White House and the federal buildings in between. Now that would be more than a message. It would be an irresistible visual image for the television cameras day after day.