9-01-05, 10:13 am
I got gas at a cheap off brand station for $2.43 a gallon, and came back today, three days later, to find that that it was $2.99 a gallon. Of course there is the New Orleans disaster, a great disaster, which has devastated oil refining. And the price of gasoline in most other developed countries, who unlike the U.S. have no major oil reserves of their own, is significantly higher. But if anything shows both the inefficiency and the injustice of permitting vital natural resources to be both privately owned and subject to the manipulation of 'market forces' (price gouging and producer price fixing, manufacturing and/or profiteering off scarcity based crises) this certainly is it.
The early press reports show the administration releasing some oil from the government reserves out of fear for the political consequences of the crisis (they should be afraid) while reports in the Middle West show gas prices reaching $3.50 a gallon.
Lawrence Goldstein, President of the Petroleum Industry Research Council, a business group, was, of course asked his opinions of the administration’s actions. First he praised the EPA’s quick decision to permit lower grade fuels into the supply with the comment 'We need to create liquidity. We need to create supply instantaneously.' Goldstein saw the administration’s use of reserves (which are 'loaned' upon request to oil companies with the promise that they will return the oil at a later date, an interesting form of state capitalism) as a 'good first step.' Why? Because it 'tells investors and the market' that government is there to help. 'It’s probably more psychological than physical, but it’s an important step. It breaks down the mindset that you are on your own.'
Who is on their own? The investors in oil stocks, not the people dependant upon private automobile transportation in a nation whose public transportation system was largely sacrificed with post World War II suburbanization. The 'market' which is the equivalent of a person to be helped, not the consumers who must continue to 'feel the pain' until the investors and the 'market' recover.
I doubt Goldstein is familiar with Karl Marx concept of ' commodity fetishism,' the explanation that policies that are made by business and political leaders are in reality not made by them but by markets, commodities, laws of supply and demand, forces outside human control which must be appeased the way primitive peoples set up totems to appease Gods. But his statements are a textbook example of commodity fetishism.
This crisis has clearly been prepared for by a government of, by, and for the oil companies, a government which barely pretends to be separate from the large multinational energy corporations. But the crisis also has long-term causes.
First, the U.S corporate government post World War II 'energy program,' was to gut public transportation, build highways and high comprehension engine automobiles and shift energy use as far as possible to petroleum products away from coal and other energy sources, including wind and solar power. This benefited enormously the oil and automobile companies who got government subsidies for the highway system with the contention that it would make the U.S. much stronger in the event of a third World War with the Soviet Union.
U.S. capitalists generally also benefited in the first postwar decades, since the U.S. had large oil reserves of its own (before WWII, it had been the leading oil exporter) but the long-term effects for everyone save the oil companies were disastrous. By the 1970s, the oil based global industrial economy that the U.S. ruling class had driven forward was centered in the Middle East, a region whose political, economic and social contradictions and instability were as great as anywhere on earth.
The huge increase in demand and the rise of an Organization of Petroleum Exporting Countries (OPEC) to limit supply produced a global inflation in the 1970s which rocked both the developed world and the developing countries. Although there were movements to develop national energy policies, find alternative energy sources, and revitalize public transportation in many countries, the triumph of pro business political forces with what Europeans called 'neo-liberal' economic policies in the U.S. and Britain particularly in the 1980s in effect set the stage for much greater crises in the future.
In the United States, the Carter administration began in its last years by launching a deregulation of energy prices. The Reagan administration extended that deregulation and also actively and virulently abandoned energy conservation programs begun by Carter along with scientific work on alternate energy resources, especially solar power, which Reagan and his subordinates associated with soft-header environmentalists.
Oil prices particularly with were always administered and manipulated, subject like any other commodity on the stock market, and thus always subject to a scarcity crisis that will drive up prices. The present situation is worse than the 1970s because we have had a generation of deregulation and, with the exception of the Clinton years, actively anti-conservation, anti-environmental governments that have buried the thought of a national energy policy while aiding and abetting corporations like Enron to extort billions from California and other states through manufactured scarcity crises. The U.S. and the U.S. influenced world economy are more vulnerable to crisis than thirty years ago.
At the end of the nineteenth century in many countries, including the United States, movements developed for the public ownership of vital natural resources. Municipal ownership of power companies was a major movement in the United States and of course the Tennessee Valley Authority, when it was established by the New Deal government in 1933, was seen as the beginning of a national public energy policy.
The Constitution of Revolutionary Mexico in 1917 established the principle of public ownership of subsoil minerals before the Soviet revolution took place, and many other countries sought to establish such principals. The Soviet Union, which became the world’s largest single oil producer, developed its industry under socialist conditions.
While the Reagan Bush reactionaries and their friends through the world went 'back' to a bogus laissez-faire capitalism, we who oppose besides criticizing their obvious failures them can and should revive the many plans and programs for social and economic planning up to and including socialism which developed in opposition to laissez-faire capitalism and served as the basis for social progress through the 20th century.
What is needed is an international energy policy, one that is public and actively seeks to regulate and eventually internationalize the multi-national oil companies while developing alternative sources of energy that reduce dependence upon non-renewable fossil fuels. Conservatives and those who are frightened of anything that is not in the mainstream will shut their eyes and ears to such a suggestion, but the masses of people who are suffering from the absence of such a policy through the world will be ready to listen.
First, progressive forces in the U.S. should take the lead in establishing a national energy authority that would reregulate energy production and prices but in a socially responsible way, eliminating the oil depletion allowance and other irrational corporate tax breaks, rewarding alternative energy innovation and conservation, and establishing a public energy sector modeled after the TVA, which capitalists like to forget was enormously successful and efficient in producing low cost power. The U.S. could also begin to work with and learn from nations like Japan and Germany which have continued to develop energy conservation programs while conservative governments since Reagan have ignored or actively opposed such programs.
Working with and through the United Nations to develop global and regional energy authorities to both diversify energy sources, regulate the multi-national oil companies and also begin to achieve the necessary economic and social development in the Middle East, the republics of the former Soviet Union, Africa, and Latin America that will make those energy producing regions far more stable and far less subject to disruptions of production, would be the next step. Along with international labor standards, nutrition, housing and health care standards, energy resources literally cry out for an international planning process that is in the interest of the world’s people, not the 'investors' and the 'market.'
If this sounds utopian, readers should ask themselves what the alternatives are. Many of the programs mentioned in this article have been carried forward in many countries at the national level in the past, often with great success, even though many have been reversed because of the political power of oil companies and their allies who are very adept at encouraging voters to cut off their noses to spite their faces.
It is much easier and cheaper to plan to prevent crises than to respond to crises. To look to the 'market' and the 'law of supply and demand' to solve all problems is rather like jumping off a building without looking at its size and expecting to be protected by the law of gravity.
--Norman Markowitz is a contributing editor of Political Affairs and can be reached at pa-letters@politicalaffairs.net.
