Whose side are they on?

April 23rd, 2006 – 9:16 pm
Tagged as: Economics

For years, those of us on the left explained to the Bush supporters that having a government which was run by people who would always place the profits of their corporate donors ahead of the interests of ordinary Americans was a recipe for trouble. The recent spike in the price of gasoline is just the latest example of how right we were.

So, why are gasoline prices going up so quickly? The oil companies are trying to make excuses, and those excuses are being reported as fact by the corporate media, but it’s just a pack of lies.

The Foundation for Taxpayer and Consumer Rights released a new study today of rising gasoline prices in California that found corporate markups and profiteering are responsible for spring price spikes, not rising crude costs or the national switchover to higher-cost ethanol, as the oil industry claims.

The real problem is that the oil companies have realized that they can manipulate the supply of gasoline by selectively closing refineries for “maintenance.” Piling that manipulation on top of oil prices that are already at record highs because of geopolitical tension (like Bush looking like he’s determined to bomb Iran) and speculative trading means that the oil companies are raking in money hand over fist.

Given the current market fundamentals we expect average prices for both oil and gas this year to be significantly above 2005 record levels,” said Fadel Gheit, an energy analyst at Oppenheimer, an investment bank. “As a result, we expect 2006 earnings to be above 2005 record levels.”

Remember, the oil companies aren’t out there paying record prices for the barrels of oil that they’re turning into gasoline. They pump, transport, and refine most of that oil themselves.

It’s not just the Saudi royal family that gets rich when speculators drive up the price of oil; ExxonMobil, which produces more oil every day than Kuwait, has enjoyed profits of $110 billion since President Bush took office. While it costs ExxonMobil about $20 to extract a barrel of oil in Nigeria, the United Arab Emirates or from federal land in Alaska or Texas, the company is selling that oil to the American people for $70/barrel.

That explains why ExxonMobil and other oil companies are posting the biggest profits in our economy’s history. ExxonMobil boasts in its 2005 annual report that it earned a 46 percent rate of return on its capital investment selling oil and natural gas that it pumped out of the ground.

While companies like ExxonMobil are out there making record amounts of money for their shareholders and executives, the rest of us pay the price.

So there you have it. There’s a substantial segment of the population that spends a very big chunk of their income on gasoline, and in the past 12 months they’ve seen gasoline prices increase by 50% — and that’s at a time when household income has been decreasing for five years running and household debt is already sky high.

Notice what the government is doing to stop this? Nothing. That, folks, is the triumph of corporations over people, and the price of having a government that’s controlled by the interests of capital rather than the interests of voters.

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