Thursday, April 28, 2011

The Rigged Game -- Rising Gas Prices, Speculation, and Big Oil Subsidies


Where are the Bush Tax Cuts going?  I am sure you may have noticed the soaring gas prices recently.  Nobody is immune to the harm these prices are causing the economy.  The national average is hovering around $4/gal, and a poll held by the Washington Post shows that 71% of American’s are experiencing financial hardships due to high prices.  All this while oil companies are reaching historic profit levels and are receiving $4B annually in tax payer funded subsidies…subsidies, according to the Wall Street Journal, that 74% of American’s want eliminated.
Recently, Speaker of the House John Boehner (R-OH) expressed his concern to ABC News about the rising gas prices by addressing the $4B a year in subsidies that tax payers give big oil.  He stated that it was “…something that we ought to be looking at…they ought to pay their fair share.”  So why is Boehner backpedaling now that democrats want to end the  $4B in tax breaks and put the issue to vote?  And more importantly, why does big oil even need these subsidies?
Former Republican National Committee chairman and Boehner spokesman Michael Steele stated, “The Speaker wants to increase the supply of American energy to lower gas prices and create millions of American jobs.  Raising taxes will not do that."  Of course we all know that this isn’t true.  Subsidizing the rich hasn’t created jobs recently, and over a 25 year period, we see that it actually causes debt.  Moreover, this isn’t an issue of raising taxes but eliminating tax subsidies.
More after the break...

The obvious answer is that big oil has these politicians in their back pocket…bought and paid for.  Katrina Vanden Heuvel of The Nation Magazine tells us “it is corporate power that has bought the oil and gas companies the ability to evade taxes;  it has bought the oil and gas companies the ability to buy these subsidies…when the American people need reinvestment in their healthcare, their education, and those things being slashed.”  She challenged democrats to push the issue and hold the gas and oil party responsible by exposing the legislators and putting the issue to a vote.
And democrats have done just that. 
Senate Majority Leader Harry Reid (D-NV)  held a vote, and House Minority Leader Nancy Pelosi (D-CA) has asked Boehner to hold a vote in the House to which he declined.
So why are republicans so loathe to let go of these big oil subsidies? 
In 2010, oil and gas lobbyists contributed $146,032,543!
 Is it becoming a bit more clear?
 Oil company PAC donations have already exceeded $285K through March 2011.  Boehner has received $15K of that $285K alone, and according to public campaign disclosures, has received over $437, 105 over his career.
 How about now?
 It is painfully obvious why Republicans won’t vote against these subsidies.
Democrats like Rep. Earl Blumenauer (D-OR) of the Budget Committee are working hard to propose a bill that rolls back these subsidies.  When asked by Cenk Uygur of CurrentTV on how democrats can keep the momentum rolling due to past polling, he informed that republicans are creating roadblocks for legislation, as they ultimately control what bills go to the floor.  Progressives, such as Blumenauer, are also proposing a windfall profits the only thing that is rising faster than gas prices is big oil profit.  Progressives are suggesting that they take the subsidy money and tax money and reinvest it in clean energy.
Rep. Ed Markey (D-MA) informed us that the Republican budget cuts clean energy 70 percent, and that the budget for agencies used in curbing speculation is to be cut in half.  Markey stated if you add the fact that republicans do not want to use the Strategic Petroleum Reserve (SPRO), “you don’t need to be Dick Tracy to realize that it is the Republican Party which sides with Big Oil, and as a result, with OPEC…keeping us on this agenda of oil and stopping us from moving to a new generation of clean technologies” which would, over the long term, let OPEC know that we don’t need their oil.  The congressman suggested we deploy our historically high 730 million barrels of SPRO oil and scare Saudi Arabia, Lybia, OPEC, and the speculators by letting them know that we don't need their oil.  According to public citizen analysis, speculation accounts for at least $30 a barrel or $0.70 per gallon. 
Exxon reported $10.65B in profits through March.  That is up 69% from last year…that’s $4.9M an hour…24 hours a day!  Why do these companies need these subsidies?  I thought that if we gave huge corporations tax breaks, we were supposed to benefit on the back end.  After the subsidies, their profits increased 69% but GDP only increased 1.8%. 
Robert Reich, former Labor Secretary and economics professor at Berkley, says these prices are dragging the economy down, because when American’s are paying so much for gas, that’s less money for everything else.  He refutes big oil’s claims that high prices and high profits are signs of a growing economy.  Reich also says that even if we drill three billion more barrels, which is pretty much the max, that it wouldn’t affect the market much, because the prices are set on the world market.  It would take at least a year for oil to reach refineries and then the pump. 
We do not have time for this.  Our economy is still fragile, and we cannot afford to wait that long, and the “drill, baby, drill” ideology actually shows no evidence that it would lower gas prices.  The companies do not use the leases that they have now, and just want more leases to show higher balance sheets.  There is no need to use those leases, because they are making record profits.  As a matter of fact, according to the Energy Information Administration, if we expand domestic oil production over the next year, prices would only change about $0.03.
Rep. Peter Defazio (D-OR) called what these politicians and oil companies are doing “manipulation” and “extortion.”  He wonders why profits are up 69% but volume is only up 10%.  Defazio said that they didn’t just become incredibly more efficient, they just became “hand and glove with the OPEC people [and] the market speculators who are driving up prices unnecessarily,” even when the panic of Lybia’s 3% of oil production was being replaced by OPEC.  He also wondered how Exxon can state that they don’t set the prices because of prices being set in the world market but then go on to state that if we let them drill, their little bit of output would decrease prices.  It is a never-ending cycle of rhetoric.  Defazio suggests that we impose a speculator tax or move proposed limits forward legislatively. 
One way or the other, it is clear that something needs to be done.  It seems to me that the right questions aren’t being asked.  Why wouldn't Boehner take it to a vote?  Why do we even need to subsidize big oil?  Why are we continuing to let needless speculation raise our gas prices?  Does this have anything to do with Big Oil contributions to the right?
Almost 2500 days have passed since the last oil subsidy bill was signed into law by Bush…yet prices continue to soar…