Burning Up that Tax Rebate

by DAVID LINDORFF

 

Remember that $400 family credit that you got from the IRS (assuming you weren’t one of those 8 million poor families that the Republicans and the president decided didn’t deserve a tax rebate)?

Well, if your family has the typical two cars and two drivers, and you each drive the typical 15,000 miles a year and get the typical 20 miles per gallon, that windfall will be more than eaten up by New Years by what might be called the Bush/Cheney oil price surcharge, which has seen gas prices soar in recent weeks to the high they reached last March on the eve of the war against Iraq. And that’s not counting the even more additional money you’ll be forking over for heating oil this winter, which for a typical home in the Northeast or Midwest, could be $450-500 (not to mention your higher electric bills, since a lot of U.S. electricity is generated by oil-fired plants, besides which coal and natural gas prices rise in tandem with oil prices).

Think back a bit to when oil prices were surging last March. The oil industry at the time blamed those record high prices on the unusually cold winter, which had depleted crude oil reserves, and on concern over threats to the Middle Eastern oil supply as a result of the coming war–concerns which caused oil traders to bid up the per-barrel price of crude oil.

Of course, the war never did produce any delays in Middle Eastern oil deliveries, and in fact, some Iraqi oil is now being added to the world market, which should be bringing prices down, not up. And there certainly hasn’t been any unusual demand placed upon supplies.

So why the record increase, which the Lundberg Survey says over the past two weeks has been the largest price hike on record since the outfit began keeping records 50 years ago?
According to the oil industry, the problem this time was temporary refinery shutdowns caused by the East Coast blackout, and by a break in a pipeline in Arizona.

Does anyone really believe this malarky? The blackout lasted a couple of days, and was not nationwide. Indeed, it was in an area–the Northeast–not particularly known as a center of oil drilling and refining. There was no blackout in California, or in Texas, or even in the Southeast–all areas with far more refinery activity. And as for that pipeline in Arizona, it is not that crucial to U.S. oil supplies except in Arizona and New Mexico.

What’s really going on here is collusive price gouging by an industry with a history of such behavior, and one that in this current political environment has become almost synonymous with the national government.

In recent years, the number of oil firms in the country, and the world, has been dramatically reduced, with the mergers of Exxon and Mobil, of Amoco and Arco and British Petroleum, and of Texaco and Chevron. That means a lot fewer companies competing.

In addition, the oil industry long ago learned how to collude on pricing without having to technically violate the anti-trust laws by sitting together in a single room or chatting on a single phone hook-up. Because these companies share refineries, share tank farm storage facilities, and share pipelines, it’s easy for each company to know all the details of its “competitors'” production plans, reserves, distribution and pricing. There are few if any secrets among them. That’s about all you need to have collusion in an industry where the main product is a commodity, priced the same the world over. And collusion clearly works far better in this industry’s interest than competition.

Everyone has seen how collusion works at the retail level. In my own community, I have three gas stations all within a block of each other–an Exxon station, a Sunoco station and a Texaco station. Every time one garage raises its price by a penny, the other two follow suit with a speed that makes your head spin. Rarely are any of them out of line by more than a penny.

The other thing you’ve probably noticed is that whenever some incident happens in the news that might logically be construed as crimping oil production or delivery–say a pipeline break or a blackout–prices at the retail pumps jump.

Immediately.

Yet the gas in the tanks underground was put there days ago, and was refined weeks, or even months ago.

Notice what happens when the pipeline gets fixed or the lights come back on though.

Did the pump price drop right back down?

No. That takes weeks, if it happens at all.

That is not the behavior of a competitive market.

And at the producer level, the situation is even more corrupt and non-competitive.

We Americans, who live and die by the automobile and by the oil that fuels it, are quick to condemn the slightest increase in our taxes (and to praise any politician who reduces our tax bill by even a tiny amount). Yet so indoctrinated are we with “free market” ideology, that we accept without a word of protest any increase in our fuel prices as a natural disaster over which we have no power or say.

Not that this Administration, whose key members almost all hail from the oil patch, would ever order an anti-trust investigation of the oil industry, even if we did start rebelling.

Dave Lindorff is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal. A collection of Lindorff’s stories can be found here: http://www.nwuphilly.org/dave.html

 

Dave Lindorff is a founding member of ThisCantBeHappening!, an online newspaper collective, and is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).

Like What You’ve Read? Support CounterPunch
August 04, 2015
Vincent J. Roscigno
University Bureaucracy as Organized Crime
Paul Street
Bernie Sanders’ Top Five Race Problems: the Whiteness of Nominal Socialism
Ramzy Baroud
The Palestinian Bubble and the Burning of Toddler, Ali Dawabsha
Herbert Dyer, Jr.
Is White Supremacy a Mental Disorder?
Pepe Escobar
Reshuffling Eurasia’s Energy Deck — Iran, China and Pipelineistan
L. Michael Hager
The Battle Over BDS
Eric Draitser
Puerto Rico: Troubled Commonwealth or Debt Colony?
Colin Todhunter
Hypnotic Trance in Delhi: Monsanto, GMOs and the Looting of India’s Agriculture
Benjamin Willis
The New Cubanologos: What’s in a Word?
Matt Peppe
60 Minutes Provides Platform for US Military
Binoy Kampmark
The Turkish Mission: Reining in the Kurds
Eoin Higgins
Teaching Lessons of White Supremacy in Prime-Time: Blackrifice in the Post-Apocalyptic World of the CW’s The 100
Gary Corseri
Gaza: Our Child’s Shattered Face in the Mirror
Robert Dodge
The Nuclear World at 70
Paula Bach
Exit the Euro? Polemic with Greek Economist Costas Lapavitsas
August 03, 2015
Joseph Mangano – Janette D. Sherman
The Atomic Era Turns 70, as Nuclear Hazards Endure
Nelson Valdes
An Internet Legend: the Pope, Fidel and the Black President
Robert Hunziker
The Perfectly Nasty Ocean Storm
Jack Dresser
The Case of Alison Weir: Two Palestinian Solidarity Organizations Borrow from Joe McCarthy’s Playbook
Ahmad Moussa
Incinerating Palestinian Children
Greg Felton
Greece Succumbs to Imperialist Banksterism
Binoy Kampmark
Stalling the Trans-Pacific Partnership: the Failure of the Hawai’i Talks
Ted Rall
My Letter to Nick Goldberg of the LA Times
Mark Weisbrot
New Greek Bailout Increases the Possibility of Grexit
Jose Martinez
Black/Hispanic/Women: a Leadership Crisis
Victor Grossman
German Know-Nothings Today
Patrick Walker
We’re Not Sandernistas: Reinventing the Wheels of Bernie’s Bandwagon
Norman Pollack
Moral Consequences of War: America’s Hegemonic Thirst
Ralph Nader
Republicans Support Massive Tax Evasion by Starving IRS Budget
Alexander Reid Ross
Colonial Pride and the Killing of Cecil the Lion
Suhayb Ahmed
What’s Happening in Britain: Jeremy Corbyn and the Future of the Labour Party
Weekend Edition
July 31-33, 2015
Jeffrey St. Clair
Bernie and the Sandernistas: Into the Void
John Pilger
Julian Assange: the Untold Story of an Epic Struggle for Justice
Roberto J. González – David Price
Remaking the Human Terrain: The US Military’s Continuing Quest to Commandeer Culture
Lawrence Ware
Bernie Sanders’ Race Problem
Andrew Levine
The Logic of Illlogic: Narrow Self-Interest Keeps Israel’s “Existential Threats” Alive
ANDRE VLTCHEK
Kos, Bodrum, Desperate Refugees and a Dying Child
Paul Street
“That’s Politics”: the Sandernistas on the Master’s Schedule
Ted Rall
How the LAPD Conspired to Get Me Fired from the LA Times
Mike Whitney
Power-Mad Erdogan Launches War in Attempt to Become Turkey’s Supreme Leader
Ellen Brown
The Greek Coup: Liquidity as a Weapon of Coercion
Stephen Lendman
Russia Challenges America’s Orwellian NED
Will Parrish
The Politics of California’s Water System
John Wight
The Murder of Ali Saad Dawabsha, a Palestinian Infant Burned Alive by Israeli Terrorists
Jeffrey Blankfort
Leading Bibi’s Army in the War for Washington