Payback Time for the Oil & Gas Lobby

 

 by Robert E. Martin

    As gasoline prices escalate to record levels prior to the Labor Day Weekend, our elected officials and so-called 'representatives' in Congress are reaping huge benefits from the Oil & Gas lobby.
     

The Institute on Money in State Politics, a consumer oriented non-profit investigative research group, recently completed a study for election year 2004 that shows the energy industry has put more than $134.7 million into state-level candidates and party committees in the past decade.
  

Almost 70 percent of that money was given to winning & incumbent candidates who decided public-policy issues in legislative sessions that followed the elections.
      

In 2002 alone, the companies gave $49.4 million. Electric utilities gave more than $57 million, while other industries directly related to energy production - such as transmission firms - gave more than $2.2 million.  Republicans received more than 60 percent of the political gifts, while 37 percent went to Democrats & the rest to third party or non-partisan candidates.
   

Not surprisingly, candidates in Texas received the most from energy interests, at nearly $24.3 million.  As is the case with most industries interested in access to policy-makers as bills are being drafted, debated & passed, their donations followed power, not political beliefs.
 

This should be of particular concern to residents of Michigan, where the impact is greater than in other parts of the country, especially given the rural areas of Northern Michigan, with its long driving distances and long winter heating season and very little in the form of alternative transportation such as passenger trains & commuter subways.

The Big Lie
 
Politicians that receive these huge gifts and the energy industries that bestow them would have you believe that instability in the Middle East or a tropical storm that knocks out one oil rig will create 'wild fluctuations' in the market. 
 

 Similarly, the 'major media' mirrors these sentiments by taking 'news stories' in the form of video & publicity packages submitted by major oil corporations, and passes the message along with little (if any) investigative journalism conducted to verify the veracity of these perceptions. Indeed, The Center for Responsible Journalism recently conducted a study on propaganda in journalism that shows as many as 40 percent of major news outlets rely upon press releases from major corporations as content for their nightly news programs.
 

But instability in the Middle East or Venezuela does not explain the way prices seem to jump in coordinated fashion, sometimes overnight, at gas stations served by major fuel refiners. Operators of those company stations claim they do not have a great deal of control over retail prices, because their wholesale prices fluctuate and margins are slim. In other words, the high profits are going to refiners, not to gas retailers.
 

Seven states have anti-price gouging laws on the books, but Michigan is not one of them. Other than a brief look at price gouging in Southeast Michigan after the August blackout in 2003, the Michigan Attorney General has not recently investigated this issue.
 

In the past, the Federal Trade Commission (FTC) has investigated high gas prices, but found no evidence of illegal price fixing among manufacturers; however, given revisions in FTC rules over the past six years, loopholes allow individual refiners & oil companies to 'game the system' and maximize profit, even if those activities are not technically illegal price-fixing within the parameters of the new FTC codes.
Elected officials should be looking at exorbitant oil company profits, not technical anti-trust rules. For example, Exxon-Mobil is reporting a record profit of $7.86 billion for First Quarter 2005, as compared to $5.44 billion last year at this time. Unocal, a U.S. oil & gas producer also reported soaring profits for First Quarter 2005 at $454 million as compared to $269 million last year at this time.

 

During debate on the recent Energy Bill passed by Congress, an amendment was presented to suspend deliveries to the Strategic Petroleum Reserve (SPR) until the price of oil falls below $40 per barrel for 2 consecutive weeks. The SPR houses our nation's emergency oil supplies. The suspension of oil delivery to the SPR would put additional barrels of oil into the market to stabilize the world's oil supply and provide relief at the pump to consumers.  However, this stipulation was not included in the final version of the bill.
 

This year Democrats sponsored the Gasoline Price Spike Act of 2005, which would have taxed excessive oil & gas industry profits when they are above a reasonable rate of return and used the money to offer relief to consumers through tax discounts at the pump. This would have helped prevent the manipulation of markets that lead to unwarranted high prices.
 

But with the Republican majority in control of both the White House & Congress, the type of consumer-oriented protection was excised from the final version of the Energy Plan.
 

Of course, why would an elected official that owns stock in oil companies and receives contributions from oil companies want to change the way things currently are?  Is there really any incentive apart from greed to drive them?
 

There's no doubt that at least some of that price rise is due to investors betting that tight supplies will keep oil prices high. That's what investors do. If they're right, they make money. If they're wrong, they get burned.
 

Experts agree that part of the increasing cost of gasoline can be attributed to escalating demand from developing countries such as China & India.  If that were the case, then why would our U.S. Congress be helping them out by giving them massive loans?
 

A little told episode in the major media, covered quite thoroughly in the August 25th edition of Rolling Stone, is the recent Export/Import Loan approved by Congress in July of this year, that in essence gives $5 billion to a state-subsidized British utility (Westinghouse) to build up the infrastructure of China, undeniably our biggest trade competitor, while also sharing advanced nuclear technology along the way with a Chinese conglomerate that had, in the past, shared nuclear know-how with Iran and Pakistan.
 

So much for the 'War on Terror'.
 

In the case of the Westinghouse loan, the bill's real interest in the Senate had little to do with gas prices and a lot to do with protecting a Republican Party member in trouble. Many of the 5,000 jobs the loan was supposed to create were in Pennsylvania, where Rick Santorum, the GOP incumbent, was struggling to hold off a challenger.
 

Imagine. $5 billion for 5,000 jobs. That's $1 million per job. 
 

And Congress can't figure out a way to bail out GM or Delphi? Makes one wonder, doesn't it?
As the price of oil continues to climb, the effects ripple across the country, affecting everything from the price of clothes that are shipped by truck to Wal-Mart stores, to home-heating oil.
 

The effects will eventually force state policy-makers to balance the needs of their voting constituencies with those of their donor constituencies.
 

The influence of the latter goes well beyond the vote total on Election Day, so the question we all need to ask & answer for ourselves is: What are you prepared to do about it?