by John M. Curtis
(310) 204-8700

Copyright April 21, 2008
All Rights Reserved.

piraling out-of-control, gas prices rocket skyward, sending ominous riptides through the economy. Only oil companies and refiners make out like bandits, while businesses and consumers watch earnings and savings decimated. “It's killing us,” said New York City cab driver Jean Beuns, losing between $125-150 a month, expressing frustration felt by every consumer and business in the country. No U.S. business can accommodate runaway fuel prices without catastrophic damage to the U.S. economy. Big Oil boasts record profits while business and consumers suffer through a period of stagnation and sluggish growth. University of Michigan's Consumer Sentiment Index hit record lows, acknowledging the recession and slow growth for the foreseeable future. No one knows how to control the rising crude oil prices that keep driving refined fuels through the roof.

      White House officials have taken a hands-off approach, giving a green light to oil companies to gouge consumers. When oil executives are dragged before Congress, they justify profits talking about “economic cycles” and costly research and development. Not so much as one word from the White House encouraging the oil industry to go easy during difficult economic times provides any guidance. “You and I are going to pay more,” said Bob Costello, American Trucking Association chief economist, worried about the harmful effects of high diesel fuel. “Exactly how much . . . I can't tell you., but it's got to show up,” sounding a pessimistic note in the near-term. Congress could get off the dime and legislate price caps on diesel fuel, hitting a record high April 21 at $4.20 per gallon. There's no excuse other than egregious price-gouging and profiteering for inflated diesel prices.

      Oil insiders like to attribute runaway prices to everything under the sun. They rarely own the price-fixing and gouging that goes with the territory. Wall Street's energy analysts and traders have one thing in mind: Bidding the price of oil and gasoline futures into the stratosphere. Pointing to pent-up demand in China and India give oil companies the perfect storm to continue gouging consumers. While Bush and Vice President Dick Cheney have given the industry the go ahead , they've won't admit damage to the U.S. economy. There's no excuse for Exxon Mobil, Chevron-Texaco or any other oil company to sock it to business and consumers at the expense of the economy. Watching light sweet crude hit $117.76 a barrel before closing at $117.48 should send an emergency call to the White House and Congress to do something about the calculated piracy driving the oil industry.

      No economy can sustain runaway energy prices without catastrophic damage. Added with the astronomical costs of the Iraq War and devaluation of the U.S. dollar, oil industry market exploitation threatens U.S. national security. There's no greater risk to national security than a weak economy. You can no longer talk with a straight face about al-Qaida as America's No. 1 enemy when the oil industry routinely manipulates prices and reaps record profits at the expense of all other industries. “It's uncharted territory,” said Tom Kloza of the Oil Price Information Service of Wall Township, N.J. “I don't think we're done, but I have to believe we're in the eight or ninth inning,” accepting the price escalation, acting like there's no way to control prices. Without lecturing the industry about controlling prices, there's no way to create the dialogue needed to get cooperation.

      There's nothing mystical about how the oil industry controls prices and regulates profits. Responsible leaders must ask all industries to do more than gouge businesses and consumers. They must take less profit for the good of the economy, recognizing that slow growth hurts everyone, including the oil business. No one industry should be allowed to profit at the expense of virtually all others. Runaway fuel prices have devastated the transportation industry, responsible for not only bringing goods and services to market but also recreation. Allowing one industry whopping profits while all others suffer makes no sense for the overall economy. No economy can survive long-term with runaway energy prices, fueling inflation and driving the U.S. dollar to record lows. Without stability in energy markets, the current economic upheaval will continue into the foreseeable future.

      Washington and Wall Street must strike a compromise between capitalism and the need for a stable economy. Foreign capital markets have no confidence in an unstable economy, racked by a falling dollar and inflated energy prices. No matter what tricks the Federal Reserve Board pulls out of its hat, it can't control energy prices, which, for some unknown reason, aren't part of the Fed's gauge of core inflation. With the dollar devalued and fuel prices going through the roof, inflation has permeated most sectors of the economy. It doesn't help that the government currently spends some $12-16 billion a month on the Iraq War, leaving few resources to manage essential domestic and foreign priorities. Washington must face reality and find a way to stabilize refined fuel prices. It's not OK to acquiesce to Wall Street, allowing traders to drive oil prices to historic new highs.

About the Author

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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