OPEC & the
Attack on the American Economy
As usual those who most loudly claim themselves to be guarantors of sound economic principles and American and Christian virtue are the first who would betray them. Notice the fat cats of Big Oil who, despite massive record profits ($40 billion last year by Exxon alone) say they need tax subsidies to encourage them to continue to exert themselves to reap windfall profits at our expense, as if $100 per barrel oil was not incentive enough.
They justify this gratuitous excess with “free market” analysis and principles even though the subsidies and tax breaks they want to maintain are antithetical to fair and free markets. On one hand they and their supporters are quick to say that “little” businesses and ordinary American must stand on their own and rise or fall on their merits and they shed no tears when these businesses fail and their jobs are exported overseas. On the other hand they demand tax incentives, subsidies and corporate welfare for giant companies with record profits. These preferments they immediately misuse as leverage to increase their unjustifiable monopolies and market share to try to run all the smaller companies and all the rest of us to ruin. In other words they want and receive government help to rip the rest of us off.
Most people have long since correctly concluded that big oil is colluding to plunder this society. Its supporters however suggest that since instances of this alleged carefully hidden market rigging are difficult to prove they must not exist and cannot be alleged. That’s a bridge too far. Though it would be nice if we had direct evidence of the meetings between them designed to rig markets (and of course we do have this proof of collusion – it’s called OPEC) actually it is just as easy to tell when a market is free or not based on the competitive behavior it exhibits in the context in which it operates.
Take the simplest of free markets – a couple of kids selling lemonade at curbside. Their business is booming. But if they have misjudged their inventory and don’t have enough lemonade on hand to meet demand or cups to pour it into or money to make change or patience to stick with their entrepreneurship for long, their business suffers. Potential profits are lost as would-be buyers go elsewhere for their refreshment.
American oil companies behave in an alternative universe from a free market business economy like this. If they, for instance, keep short reserves or intentionally rein in inventories by resisting building enough refining capacity to serve their expanding market, they actually make more money by selling less product. In general, unlike real businesses, the more inefficient a closed market business is the more profitable it becomes. This is good work if you can get it.
For suppliers in a controlled market it is always win-win, for their customers it is forever lose-lose. This is exactly what Enron and others did to artificially create the California energy crisis at the beginning of the Bush administration (which stood by and let them do it) and stole billions of dollars from the public in the process. Companies that can operate like this are not “free” markets in any sense of the word as, since no competition is able to challenge their market share, it actually pays them to contract their supplies to cheat their clients. And so, as ethics have no place in modern business practice, precisely to the extent they are allowed to get away with it, they will.
When a market doesn’t punish inefficiencies but rewards them, this by definition is not a free and competitive market. So not only is the American oil market obviously not free and competitive it is clearly consciously rigged to victimize the average consumer when ever it chooses to enhance its bottom line. And those who try to hang the hallowed mantle of “free enterprise” protections on the predatory oil business are particularly dishonest when you recall that the base price of oil is set by collusion on an unprecedented and quite public scale by a cartel which controls the flow of crude oil. The OPEC cartel artificially restricts the amount of oil which reaches world markets by keeping production levels low to keep prices as high as possible. Then American oil companies additionally compound these shortages by artificially restricting the inventories of refined oil products that may reach consumers in this country. This is greed on greed.
When you consider who the member states of OPEC are, you find many nations who do not necessarily mean well by us. You may then realize OPEC is playing out a variant of the old Leninist maxim - “when it comes time to hang the west we will sell them the rope to do it”.
Today the rope is oil and it is the noose hanging from the highest tree of our current evils. The oil cartel is not just a monopoly but is in open and flagrant assault against all our most cherished economic principles from free markets to free trade. It is a clear present and future threat to our economic independence. OPEC exacts a hidden, high and rising tax on each and every American at each and every point of our daily lives. It is undercutting the present and future vitality of our economic prosperity. It is destroying our ability to properly wage foreign policy. As the dollar declines and more investment and speculation flow into the oil markets its costs to us are increasingly exponentially. Finally this rapacious oil money is corrupting to everyone its exorbitant wealth touches along the way from business, to investors, to members of congress.
The United States has not suffered such an imminent threat and infringement on our political freedoms and our economic vitality since Britain controlled the sea lanes in the first fragile fledgling days of the Republic. Oil is destroying our economy from inside out. The OPEC cartel and the OPEC tax on our economy is a far greater and more insidious threat to our future than terrorists (to whom they lend surreptitious support) have ever been.
Make no mistake about it, this is economic piracy. If OPEC were a consortium of American companies operating solely under color of American law they would be subject to criminal indictment. Because they are not and control most of the readily available supply of petroleum in the world they have us, as it were, over a barrel. But the vendor of a product cannot be separated from its source. Oil companies that operate in the US, while not those setting the artificial rates, still subject us to the OPEC premium price and profit just as if they were charter members. To claim these oil companies are somehow dissident from the roots of their own pricing structure is like saying the branches are different from the tree. The root of this problem is indistinguishable from the vines and tendrils that are choking the life out of our economic independence.
There is no need for malice against the executives of American Big Oil, but a bit of realism is certainly called for. To suggest that American oil companies are somehow quarantined from the disease that OPEC is spreading in the world is to be naively disarmed against the danger this cartelism represents. When oil was $2 a barrel based on the actuality of how much it cost to extract from the ground, it was a normal economic commodity, net facilitator of world economic activity and worthy of free market protection just like any other product. Once it became a cartel the oil business became a parasite on the economy of the world. It is a mortal enemy of our way of life and freedom and makes a mockery of every concept of free enterprise and an honest days work we have.
Even the president has called it an addiction. Unfortunately he and his cronies in congress are street corner pushers of the very substance we are addicted to. This is the most oil soaked administration in American history. They are selling us out from within. Obviously their assault on science concerning the well established issue of global warming was only a guise meant to veil the fact that they have deep financial interests in keeping the country as addicted as long and profitably (to themselves) as possible to the polluting drug of oil. Conservation and energy efficiency are as anathema to them as the DEA and drug rehab programs are to drug dealers.
When Dick Cheney’s secret energy task force plotted energy policy for this administration, though they outwardly preached energy independence, they were really secretly practicing methods to dig us even deeper into the dry hole of energy dependence on OPEC. Prominent at these proceedings was Enron, one of the most thoroughly corrupt corporations in American history. This should tell you everything you need to know about the hidden agenda of these meetings, Dick Cheney’s presence and the secretiveness of the agenda they discussed should tell you the rest. That people at the heart of our government are more than willing to consistently side with OPEC against American consumers and to seek profit from the nation’s economic dependence and demise by further mortgaging our future to our enemies is unprecedented and unconscionable.
Furthermore the administration’s policy is to open up our markets wide even as our ability to compete in world markets declines because our production costs at home continue to rise. This invites our capital to be invested overseas rather than at home. Such a policy will be ruinous. Jefferson sent the marines to fight the Barbary pirates, the bunch we have in charge today is encouraging the pirates to come to attack us.
II
Still many people are reluctant to think so badly of our leaders and their laissez faire tendencies which, since they are rigged against us in the other direction, aren’t really so laissez faire after all. But consider tobacco, a similar addiction which the nation has also had to fight to overcome. Like oil there is a certain romance about tobacco in this country. It was the nation’s first cash crop. It was the staple of the Virginia planters like Jefferson and Washington. Its pedigree is long and its cultivation might be called one of the building blocks of the nation.
Unfortunately, like anything that becomes too much of a good thing, it was eventually found that its smoke polluted the lungs and was unhealthy in the extreme. But this was not before its pernicious fumes had permeated everywhere and could barely be gotten out of the nostrils of the nation, out of the taste of food, the smell of hair and clothes and furniture. Every public room you walked into was found to have had smokers preceding you. It is literally a cancer that steals at least ten years off the average life of someone addicted to it. And it is so extraordinarily addictive that once started it is extremely difficult for users to ever free themselves of its hold upon them.
The addiction of oil falls into a similar category. It was absolutely instrumental in the economic rise and success of the US in the twentieth century. Wildcatters are legendary, petroleum finds are romantic and etched into the business lore of the nation. Its plentitude, versatility and inexpensive costs helped make us economically dominant in the world. It literally greased the gears of the nation. Of course, it has always been a dirty fuel, but at the outset its pollution was a small price to pay for the huge profits that accompanied it and the great variety of uses it was put to. And although there were always those who tried to monopolize it and who always had to be checked, by and large, though always reaping very healthy profits for a very few, the business was operated according to free market principles.
Some might say that this is sour grapes, that we only decry the use of oil now because it must be imported and our own stocks of it have run so low. But the real issue is that of the corrupt cartel which seeks to hold the entire world hostage to unreasonable shortages and windfall profits. This is a pure assault on the free market system of the world order. Since oil has become the world’s very life blood, absolutely necessary to any modern economy, running essential elements of every developed economy in the world, key even to the production of the food we eat and the lights we see by, it is a critical resource which when withheld threatens world economic prosperity and the integrity of markets the world over in the way absolutely nothing else can or ever has.
In the same way tobacco became a threat to our physical health, oil has become a cancer on our way of life, on our environment, on our economic future and on our very freedoms. The cancer is spreading and growing worse. Of course it is most noticeable at the pump, the price of oil, but its surcharges permeate every aspect of our economic existence. In addition, by now its use has become so ubiquitous that its use is polluting the world and helping to change our climate in new and quite worrisome ways.
Meanwhile, it exacts a daily, hidden OPEC tax on every person in the country. It is an imbedded part of most purchases, from food to travel to mowing your own lawn at home. This surreptitious tax on the American citizenry, like an unlegislated value added tax, is levied on nearly every purchase we make and sent directly out of the country back to OPEC member states and giant oil company behemoths which are all recording record profits at our expense. Paying taxes to our own government is sometimes hard enough but the oil cartel surcharge is a confiscatory tax levied against every American by Big Oil with no conceivable benefit to the nation in return.
Yet our political leaders, like corrupt tobacco company execs trying to hook the next generation of ten year olds on cancer, insist we can drill our way to freedom out of the very hole they continue to dig us deeper into. Our government would peddle what remains of our natural resources to Big Oil cheap so they can sell our own resources back to us at corrupt, windfall, cartel set prices. This is no bargain. What is the point of a nation having natural resources if you allow them to be stolen by a cartel and sold back to its citizens at exorbitant prices set by other nations to enrich themselves at our expense. Especially when it just spreads the addiction to the disease further.
It is time we think of these gargantuan oil companies and the think tanks and politicians that support them as what they really are – front men for the criminal cabal of OPEC in America. As a multinational cartel they have largely divorced themselves from the needs of their own country. So, in the same way tobacco companies tried to subvert science by hiring hokum studies to support their dishonest contention that nicotine represented no health hazards, oil companies with their unjustly acquired wealth fight alternative sources of energy.
Big Oil (OPEC) helps fund “think tanks” to hire studies and pay lobbyists to strong arm politicians to fight all attempts at campaign finance reforms. They oppose proposals to establish social welfare and plans to provide affordable health care and educational reform to the American people and propagandize against all regulation and taxes which might impede their slow dominance over us. On the other hand they do support fighting unnecessary wars, the military/industrial/petroleum complex, Detroit’s self-destructive abhorrence of fuel efficiency standards and all compliant politicians who, in their unholy bargain with a foreign cartel, compromise their integrity and our futures together by helping send our economy to imminent ruin for a few bucks on the side.
Big Oil and the politicians that support them aren’t patriots but predators of the American way. They are OPEC. This may be a bitter pill to swallow and, as I say, it needn’t be administered acrimoniously, but it must be administered and understood clearly and realistically. The heroin regime of oil dependence we have in this country today simply cannot be maintained without destroying us.
We need an intervention to wean us off of our oil addiction. Of course, it will take money. The worst and most unjust way proposed would be to levy a new heavy tax on gasoline in order to harm the consumer even more. This must be rejected out of hand.
But as there is no way to set or control the prices we pay for refined oil products nor find any way to fairly assess their OPEC engendered liabilities on us on a day to day transactional basis, we may only seek after the fact restitution by taxing the unjustly high and patently illegal, cartel derived profits after the fact. In this way we can retrieve at least some of the money already stolen from us by OPEC manipulated markets.
That is why a windfall tax must be levied on big oil as soon as a new administration is put in place. Call it what you will, an OPEC tax or an energy independence tax. Whatever it is called it will be justly applied. Everyone knows OPEC/Big Oil have been robbing us blind for decades, ever since the scourge of OPEC first came into being. No one can plausibly allow them to hide behind free market arguments when oil has nothing whatsoever to do with free markets except to subvert them.
Conservation, of course, has proven to be the most cost efficient and quick return on investment. This must be encouraged and supported with federal incentives to individuals and families. Vigorous research programs into alternative sources of energy must be quickly funded and put into place and practice. Scientific and engineering innovations must be given the lead to invent our way out of this dependence that normal advances in science and engineering have in some respects put us into.
There’s no quick fix or cold turkey answer to these problems. This period will be transitional as old forms of high energy consumption are traded out for more efficient and environmentally friendly ones. Money not used to encourage and support free market energy alternatives should be devoted to rebuild the infrastructure connected to roads and bridges and air travel which have been allowed to deteriorate as these too, are the building blocks of our economic prosperity.
The government must be deeply involved in this. One of their chief responsibilities is to ensure a smoothly flowing, efficient, fairer, greener, free market based economy – what we have now is none of these.
