Why Big Oil won’t rein in galloping gas prices

The price of a gallon of gasoline averaged $2.95 in the United States on May 7, up 4 cents from late April, according to the Lundberg Survey. Millions of people are suffering due to high fuel costs. Some are being forced to cut back on food and other necessities or pawn personal items just to afford the gas they need to drive to work.

Under the circumstances, you could be excused for thinking that Big Oil profiteers would be lying low. After all, amidst the crisis, oil companies are making record profits as oil prices hover around $70 a barrel.

You might even imagine that they would exert some of their enormous economic power and political influence to push prices down and protect themselves from the public ire.

Oh, no.

Instead, on May 3, ExxonMobil Chief Executive Officer Rex Tillerson appeared on NBC’s “Today Show” to defend ballooning oil company profits.

“It’s the free market,” he said, throwing up his hands, as though that was the only explanation required.

He pleaded not guilty to banditry at the expense of workers who are emptying their wallets to get to the grocery store, visit the doctor and pick up their kids from school.

He said ExxonMobil and other companies were using some of their profits to “boost refining capacity and launch new exploration projects.” Well, yes—capitalists reinvest their profits so they can make more. Big deal.

“We’re in business to make money,” Tillerson added helpfully. True, and last year, ExxonMobil raked in the biggest annual profit of any company in history—$36.16 billion—up 43 percent from 2004. (Washington Post, Jan. 30)

ExxonMobil’s profits rose again in the first quarter of 2006, to $8.4 billion, up from $7.86 billion in the same period last year. (Bloomberg, May 8)

Tillerson’s not alone. Business Week Online reported May 5 that the 2006 earnings forecast for ExxonMobil, BP, Royal Dutch Shell, Chevron, Total and ConocoPhillips totals $135 billion—much more than the gross domestic product of many countries.

According to a report in The Independent of London on May 7, Big Oil has spent an estimated $20 million on public relations advertising in the U.S. since the beginning of this year. And that’s just a foretaste of the millions of dollars in campaign spending, lobbying and advertising planned as mid-term elections approach in November.

Don’t believe the hype

Make no mistake: obscene profits make the executives and big shareholders of the major oil companies happy as hogs in mud. Times have been good to them. After all, the White House and Congress are controlled by their closest cronies, and the world’s biggest war machine is mobilized full-time on their behalf.

Yet they’re worried. Why?

As capitalist enterprises, the oil monopolies are driven by intense competition to maintain and increase their rate of profit. Anger against them is growing globally. It’s reached the point where future earnings could be threatened.

On May 1, to the applause of many of his people, Bolivian President Evo Morales announced “a historic day in which Bolivia retakes absolute control of our natural resources.” Morales put natural gas and oil reserves under state control and ordered 25 foreign energy companies to renegotiate the terms of their contracts.

Bolivia has joined with Cuba and Venezuela, one of the world’s leading oil producers, in a trade agreement opposed to exploitative treaties pushed by Washington. Venezuela, too, has demanded more equitable arrangements from foreign companies—while offering low-cost heating oil to impoverished U.S. communities as an act of solidarity.

On May 8, Iraqi resistance forces bombed an oil pipeline south of Baghdad, the latest of many such attacks that have hampered oil production, export and profiteering under the U.S. occupation. George W. Bush’s invasion of Iraq was supposed to make that country into a private U.S. oil reserve. The popular resistance has stymied that plan indefinitely.

The Bush administration is now bullying Iran, another major oil producer, over its development of nuclear technology. In response, Iran’s government has threatened to cut off oil exports to the West.

Unrest in Nigeria, Sudan, Chad and other African countries is making it hard for Big Oil to follow through on plans to exploit their oil reserves. Russia is demanding more control of its petroleum resources. And so on.

Exxon exec paid $144,574 a day

Residents of the small town of Beeville, Texas, have launched a boycott of ExxonMobil, the Associated Press reported May 8. Though modest, such actions demonstrate the depth of anger against Big Oil here at home.

Outrage was stoked by a New York Times report that former ExxonMobil CEO Lee R. Raymond was paid the equivalent of $144,573 a day over 13 years, including a nearly $400 million windfall in 2005.

Raymond is a particularly gross illustration of the fact that CEOs make on average 531 times what their workers are paid.

Meanwhile, the likelihood of poor people in the U.S. raising their standard of living significantly—slim to begin with—is shrinking.

According to “Understanding Mobility in America,” a study released in April by economist Tom Hertz of American University, a child born into a poor family has only a 1 percent change of ever getting into the top 5 percent of income-makers.

In fact, the “land of opportunity” has one of the lowest levels of income mobility among the wealthy capitalist countries.

Most workers in the U.S. have not read this report, of course. But they live with its consequences every day—not only at the gas pump, but whenever a friend or loved one comes home in a body bag from Iraq, or when a prescription medication is priced out of reach.

Big Oil execs know that quiet anger is starting to turn into mass political action. If there were any doubts, the May Day outpouring of immigrant workers and their supporters proved it.

In an attempt to co-opt and divert mass anger into safe channels, congressional Democrats are calling for a tax on what they term “excessive profits.” President Bush has committed the federal government to investigate charges of “price gouging.” Some states, like California, are following suit.

Even if these initiatives were followed through, they would only amount to a slap on the wrist. But Big Oil can’t tolerate the thought of it—hence the millions being pumped into congressional election campaigns, ads and lobbying.

If the rate of profit is great enough, Karl Marx said, there is no crime capitalists will not stoop to, no atrocity they will not commit. Ultimately, to end high fuel prices, oil wars and the environmental destruction caused by abuse of fossil fuels, the working class must expropriate Big Oil and all capitalist industries and run them for people’s needs, not profits.