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Big Oil's great deception

Your Turn



You're being robbed, your pockets pilfered. As gas fills your tank, it empties your wallet. You know it.

Some blame high gas prices on "evil government" preventing more drilling. They cry, "Drill here, drill now!" Our own Republican congressman, Doug Lamborn, writes on his website: "The most urgent and immediate solution though is to ramp up domestic production of oil and gas right now."

Put bluntly, that's a lie. Increasing quantities of oil are being exported from the U.S. With high gas prices, America exports oil? Really?

Yes, really. The numbers: Since 2005, oil exports have risen by 483 million barrels, while imports have fallen by 377 million barrels. The result: Net petroleum (imports minus exports) in the U.S. was 25 percent less.

Some argue more exports are OK; oil can be exported to places like Japan, which are closer to oil from Valdez, Alaska, so we can import more from places closer to, say, San Diego.

False! First, San Diego is closer to Valdez than Japan is, by 1,200 miles. Second, the oil corporations are importing less, while exporting more.

How can this be? Proponents of increased domestic production maintain it will put more of "our oil" on the U.S. market and lower gas prices. Not so. Once they get those leases, any oil they get is "oil corporation oil" — not "our oil." They can sell it anywhere. And they do — for greater profits.

"Free market" ideologues, like Lamborn, maintain the magic of the "invisible hand" solves such problems. Yet they call for greater government subsidies for fossil fuels rather than for renewables, though investing in clean energy could create four times as many jobs. This is insane.

The oil industry is an oligopoly (dominated by few sellers). Each can be aware of others' actions, enabling tacit collusion to manipulate prices. They can restrict supply to raise prices in much the same way a monopoly does.

Public Citizen, the nonprofit consumer advocacy group, reported in 2004 that the largest five oil companies operating in the U.S. (ExxonMobil, ChevronTexaco, ConocoPhillips, BP and Royal Dutch Shell) control 48 percent of domestic production, 50 percent of domestic refinery capacity and 62 percent of the retail gasoline market. Government Accountability Office testimony in 2004 reported that "2,600 mergers occurred in the petroleum industry from 1991 through 2000 ... reasons cited generally relate to the merging companies' desire to maximize profit or shareholder wealth."

Mission accomplished. The oil oligopoly exports more and imports less to reduce supply, create scarcity, drive up prices, and increase profits.

Artificially restricting the supply of oil in the U.S. available for refining yields higher gas prices and profits here. And selling U.S. oil on the world market at prices driven higher by speculation increases profits. Very clever.

What's more, you get to pay them to do this! The nonprofit, nonpartisan Environmental Law Institute reported that the federal government subsidized fossil fuels much more than renewables for fiscal years 2002 through 2008: $70.2 billion to coal and oil compared to $29 billion for renewable fuels. Bloomberg reported global government subsidies for fossil fuels were $557 billion in 2008, dwarfing the $43 to $46 billion for renewables in 2009.

This market manipulation plunders public resources for private gain. It increases gas prices. It pollutes, increasing sickness and death. It undermines economic and national security. It's economic treason.

How long will you tolerate this? As for myself, I'm done. What "conservatives" call the "heavy hand of government" should use anti-trust laws to smash these corporate behemoths. Better yet, nationalize the industry to stop the theft and rebuild, not erode, economic and national security.

Yes, that's "free market" heresy. To quote Republican House Speaker John Boehner, "So be it."

Bob Powell, Ph.D. physics, MBA, is a consultant using systems thinking.

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