Big Oil Guzzles Profits
As Gas Prices Rise

By Greg Butterfield
Workers World
Like a gas station under a blazing summer sun, drivers are fuming. Gasoline prices topped $2 per gallon across the United States in late May. Crude oil hit a near record price of $41.72 a barrel at the close of trading May 24. Rising costs are creating real hardships for millions of poor and working people who must drive to their jobs or to meet family obligations.
The crisis isn't confined to U.S. shores. Truckers in California, cab drivers in London and labor unions in Beirut have all staged protests against rocketing gasoline costs.
Workers want to know: Who's to blame? And how can the problem be fixed?
Democratic presidential candidate John Kerry blames OPEC--the 11 major oil-producing countries of the Middle East, Latin America, Asia and Africa. He called on President George W. Bush to pressure OPEC to increase oil production.
Bush also blames OPEC, but says the best solution is to develop more of the known oil reserves under U.S. control. That's Bush-speak for drilling in protected lands and waters, and for continuing the war to subjugate Iraq.
Bush and Kerry claim there's too little oil being pumped. But is that the real problem?
No, according to a study released May 12 by the Consumer Federation of America and the Consumers Union. These groups put the blame squarely on big oil companies like ExxonMobil, ChevronTexaco, ConocoPhillips and Shell.
Since the mid-1990s, mergers have reduced the number of oil companies from 34 to 15 and the number of oil refinery firms from 15 to seven. Refineries have been closed. As a result, unrefined crude oil is being held back from the market to artificially inflate prices and generate huge profits for Big Oil, according to the CFA-CU report.
"[T]he industry engineered $250 billion of total price increases since 2000 so it could reap $80 billion in profits. In turn, the consumer paid the price, to the tune of $1,400 per household, shouldering the expense of higher gasoline, natural gas and heating oil charges." (Doylestown Patriot, May 20)
Tim Hamilton, a petroleum industry consultant, told the Coldwater, Mich., Daily Reporter that "with companies merging and refineries shutting down 'we barely have enough refinery capacity to meet our needs ... They drive the price way up to slow the consumption down to meet the gas that's available.'
"He said that results in huge profits for the oil companies. One consumer group reported last year's 35-percent increase pumped up oil-company profits by a combined 926 percent.
"'If you think this year's bad, wait until next year,' Hamilton said."
In California, State Senator Joe Dunn announced hearings on the oil companies' role in driving up prices at the pump, with a special focus on Shell Oil's plan to close its Bakersfield, Calif., refinery. Dunn and U.S. Senator Barbara Boxer said they suspect Shell of "intentionally crimping supplies."
"Is there a supply problem? Yes. But there's a supply problem as a result of a deliberate strategy of the gasoline industry," Dunn charged. (Los Angeles Times, May 18)
Don't blame OPEC
Since the 1970s, OPEC has been a favorite scapegoat of politicians trying to promote anti-Arab racism and draw attention away from U.S. oil industry profits. After all, Big Oil is a major contributor to both Republicans and Democrats.
A report published on the BBC's web site May 5, headlined "Oil soars despite overproduction," revealed that OPEC countries are already pumping "far above their quotas."
"OPEC cut production at the beginning of April by a million barrels per day (bpd) to 23.5 million, after many of its 11 members complained that the falling dollar outweighed price rises as far as their revenues were concerned," said the BBC. "But according to the organization's president, Purnomo Yusgiantoro, about 1.5 million bpd are still being pumped beyond the quota."
And on May 24, Saudi Arabia agreed to raise oil production by another 800,000 barrels per day. Despite this announcement, prices continued to climb.
U.S. oil monopolies limit the amount of refined oil on the market, knowing that worldwide demand has grown 35 percent since 1991. The Bush administration is a loyal accomplice in this criminal enterprise.
Much of the already limited pool of refined petroleum is being diverted to the U.S. war machine. Iraq sits atop the world's second-largest known oil reserves. But the tenacious Iraqi resistance has so far prevented large-scale resumption of drilling and refining under U.S. control. Millions of barrels must be imported to grease the wheels of the occupation.
Another 120,000 barrels per day are being diverted to the U.S. strategic petroleum reserve. In November 2001 Bush ordered that the reserve, housed in underground salt caverns along the coast of the Gulf of Mexico, be filled to its maximum capacity of 700 million barrels. The reserve is at 659.5 million barrels and growing. (French Press Agency, May 19)
In campaign speeches Kerry said Bush should dip into the strategic petroleum reserve to ease high prices for consumers. Bush rejected that, claiming it "would put America in a dangerous position in the war on terror."
Still, there's nothing to prevent Bush from releasing some oil later in hopes that a temporary price dip could aid his re-election chances.
Open the books!
Blaming the OPEC countries isn't a solution to high oil and gas prices. Neither is relying on promises by mainstream presidential candidates. Both Republicans and Democrats are beholden to Big Oil.
Oil is a vital energy source needed throughout the world. Yet its refinement and distribution is thoroughly monopolized by a handful of Western--mainly U.S.--companies, who manipulate the market by creating artificial crises to boost profits.
The whole world knows that Big Oil's lust to control Middle Eastern oil is a key factor in the U.S./British war and occupation in Iraq. These companies have also worked tirelessly to sabotage the development of alternative, safe energy sources and undermine environmental protections.
Should such power remain in the hands of the oil monopolies? Shouldn't the working class demand control over this vital resource to benefit all people?
As a start, labor unions and community organizations could demand that the oil companies open their books to an independent investigation.
- Reprinted from the June 3, 2004, issue of Workers World newspaper
Copyright Workers World Service: Everyone is permitted to copy and distribute verbatim copies of this document, but changing it is not allowed



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