May 19, 2008
Bush, pushing the Saudis to announce an increase in their oil production, pretended the additional supply would bring down the price of petroleum, and all its refined products.
The Democrats in Congress, ordering the Bush administration to divert oil from the Strategic Petroleum Reserve into the ordinary oil supply, made the same claim.
Nothing but propaganda! Not only did increasing the supply of crude oil not bring down its price – the price continued to hurtle upward. Of course. Because the cause of high oil and gasoline prices today is not a lack of crude oil. By every measure, supply is plentiful. Even defenders of the oil industry admit that. A managing director of PFC Energy, a petroleum consulting group, was quoted by the New York Times, saying: “I don’t see many American refineries clamoring for oil right now.” The big U.S. oil companies aren’t clamoring because they have more than enough.
Yet oil prices are running away, squeezing all our pocketbooks. So are prices of fruits and vegetables, many of which come from other countries, and for the same reason: the U.S. financial crisis, caused by the collapse of speculation in housing and mortgages, has pulled down the value of the dollar.
If you travel across the border into Canada you know what this means. Whereas not so long ago, one U.S. dollar got you 1.35 or even 1.50 Canadian dollars in return, today one U.S. dollar gets you less than one Canadian dollar. When the U.S. dollar is worth less, you’ve got to put out more dollars to get the same amount of commodities – oil, for example, or fruits or vegetables, or clothing, etc.
And that’s only the half of it.
The other half is speculation. When housing speculation collapsed, the speculators just diverted their bets from housing and mortgages to more fertile fields.
And guess what they hit on – oil, driving up the price we pay for transportation, electricity, heat and even for food, since petroleum goes into the fertilizers used in commercial farming. And not only oil. Speculative money has been pouring into basic agricultural commodities: wheat, corn, oats, soy, sugar, coffee. So we pay more for bread and cereals, and also for meat, dairy products and eggs, since animals feed off these same grains.
The same sharks whose speculation priced housing out of the market for many workers are now speculating in the basic commodities we need to survive. In some other parts of the world – parts of Africa and Asia especially – speculation in these basic commodities is leading to mass starvation for hundreds of millions of people who could barely afford to buy staples before the speculators moved in.
Some of the biggest Wall Street banks are involved – as are the oil companies, themselves, and major industrial corporations. They buy commodities not in order to use them, but to sell them at a higher price, buy them back, then sell them at a still higher price, driving up prices with each new sale.
If Bush and Congress wanted to do something about the high cost of oil and other commodities, the first thing they would do is round up the speculators. Hang them out to dry. Close down the Wall Street casinos. Take over the big investment banks. Get an exact idea of the wealth belonging to each of them. Put that money to use hiring people without jobs. Put it to use producing the goods and services we need. Repair the cities, build the schools, etc.
A foolish dream? Yes, of course – if we count on either Democrat or Republican to do it. Neither would think of touching the vast sums of money that circulate in the financial world. Nor would they put their hands on all that profit the oil giants have been amassing.
Like all the other problems we face, the answer to skyrocketing prices will have to come from ourselves – from our determination to use our forces to impose the needs of the whole population on the tiny minority that today rips off the whole world.