Obama's Feckless Response to Big Oil

by John M. Curtis
(310) 204-8700

Copyright February 26, 2012
All Rights Reserved.                                         

          Threatening to tank the fragile U.S. economy, Big Oil has lashed out again, raising oil prices over 10% in the last few weeks.  Blaming the price hikes on everything but the kitchen sink, there’s no limit to the excuses given by the oil industry to justify price hikes, including, but not limited to (a) crude oil price hikes, (b) oil refinery shutdowns, (c) growing global demand, (d) costly summer blend gasoline, etc.  Spinmeisters at the New York Mercantile Exchange have every excuse under the sun ready to bid up oil futures.  “Since December, the U.S. has lost about 4% of its refining capacity,” said Fadel Gheit, a senior oil and gas analyst for Oppenheimer.  Despite demand for crude oil products down about 15%, pump prices continued to skyrocket.  Pointing to various plant shutdowns, Big Oil has all the phony reasons to justify the latest price hikes.

          Instead of rolling over, President Barack Obama should be putting Big Oil on notice that the Justice and Commerce Departments will be opening up investigations into price gouging by Big Oil.  Just as consumers begin to loosen their purse strings, the oil industry hits them with a punitive tax at the gas pumps.  Discretionary income, needed desperately to fuel the consumer economy, can’t be whacked by Big Oil to justify whopping increases in shareholder value.  “We know there is no silver bullet that will bring down gas prices or reduce our dependence on foreign oil overnight,” said Barack in his weekly national radio address, knowing full-well that dependence on “foreign oil” has nothing to do with today’s price-hikes.  Most of the U.S.crude oil for refining comes from Mexicoand Canada.  Should the U.S.abandon the North American Free Trade

             Obama’s remarks, like the oil Industry, are designed to blow smoke during an election year in which sizable donations to his SuperPac will come from Big Oil or those industries closely tied to it.  “But what we can do is get our priorities straight and make a sustained serious effort to tackle this problem,” knowing the real problem is the arbitrary and capricious way Big Oil gouges consumers when it’s time to raise earnings and profit margins.  Reducing dependence on foreign oil or refined gasoline has nothing to do with today’s egregious run-up in pump-prices.  Instead of buttoning his lips during an election year, Obama should be taking Big Oil to task for attempting to kill the hard-fought economic recovery.  Everyone suffers, including small merchants on the streets to the biggest industrial plants in the land when they have to pay higher transportation costs for goods and services.

             No one wants the commander-in-chief to blow more smoke about U.S. dependence on foreign oil.  Obama knows that most U.S. crude exports come from friendly neighbors to the north and south.  Showing that both parties pander to Big Oil, Texas Sen. Kay Bailey Hutchison blamed Obama for discouraging more domestic exploration, another red herring.  “We can’t slow down global demand for oil and gas, but we can do a lot more here at home to assure that we have the energy we need to halt skyrocketing costs,” said Hutchison, blowing more smoke than a Texas barbeque.  She knows that global demand is down 15% and that the U.S. gets plenty of crude oil from Canada and Mexico.  With crude oil and refined products traded on global exchanges, Hutchison knows that drilling in the Alaskan National Wildlife Refuge [ANWR] won’t change the price of fossil fuels.

             More offshore or domestic drilling only affects energy markets by creating the perception of greater supplies.  Obama and Hutchison both make the same predictable excuses about foreign dependence and more domestic drilling, having nothing to do with refinery shutdowns at Sunoco and ConocoPhillips refineries in suburban Philadelphia.  Whether a refinery shuts down in the Caribbean’s St. Croix, it’s not related to today’s rapid run-up in pump prices.  More excuses about domestic production, refinery shutdowns, global demand, etc., divert attention away from Big Oil’s decision to ramp-up earnings and profits.  Instead of rolling over, Obama should put the oil industry on notice that any manipulation to raise oil prices will be met with Justice and Commerce Dept. investigations, pressing ahead with fines and eventually implementing a new windfall profits tax. 

            Talk of refinery shortages, global demand, domestic and foreign oil production, etc. can’t hide Big Oil’s attempt to squeeze consumers, whether big or small.  Hiking oil prices is a more real threat to U.S. national security than current speculation about whether or not Iran seeks the A-bomb.  Nothing spurs more inflation than pushing pump prices through the roof.  All the GOP’s talk of tax cuts pale in comparison to the punitive tax paid by consumers when pump prices go up.  Instead of bowing down to Big Oil, both political parties need to get on the same page and put the industry on notice that they won’t tolerate price-gouging.  With the price of unregulated regular nationwide hitting $3.65 a gallon, there’s little room left before it starts hitting the economy with a wrecking ball.  Instead of throwing in the towel, the White House and Congress should tell the oil industry to back off.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com.and author of Dodging the Bullet and Operation Charisma.       

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