It’s hard to grasp the immensity of ExxonMobil’s profits for the second quarter of this year.
More money made in three months than the U.S. government spent on its food stamps program. More money in three months than nearly 400,000 U.S. workers getting average pay will earn in all of this year. More money made each and every second during April, May and June than a minimum-wage worker earns in a month and a half of full-time work.
ExxonMobil announced that its earnings for the second quarter rose nearly 14 percent to $11.7 billion. It’s the biggest quarterly profit for any U.S. corporation in history, and it comes on top of Exxon’s record-breaking profits last year, when the company made $40.6 billion over the 12 months.
In all, ExxonMobil had a gross income of over $404 billion last year–more than the gross domestic product of two-thirds of the world’s countries.
Exxon isn’t alone. Royal Dutch Shell, Europe’s largest oil company, reported a 33 percent increase in second-quarter profits, to more $11 billion. And BP, Europe’s second-largest oil company, reported it made $13.4 billion in the first six months of the year.
But while profits have never been better for the oil industry, across the U.S., working class and poor people are feeling the pain of high gas prices.
Nationwide, gas prices are averaging just below the $4 a gallon mark. Though there are signs that the oil bubble is deflating, consumers are still paying at the pump. Crude oil prices were averaging about $115 a barrel as Socialist Worker went to press–less than the all-time high of more than $147 a barrel in June, but still nowhere near the $72 a barrel it was at in December of 2007.
As a result, according to a recent report by the U.S. Transportation Department, over the past seven months, Americans have reduced their driving by more than 40 billion miles. March, April and May marked the steepest three-month reduction in driving on record, according to the report.
With driving down, the number of people riding Amtrak has risen 11 percent this year, and mass-transit systems in many areas, including Seattle and South Florida, are experiencing increases of 30 percent or more.
That might seem like good news in a world of pollution and global warming, but underfunded and often out-of-date public transit systems are straining to keep up. Plus, because consumption of gas is dropping, so are federal fuel taxes, which go largely to help finance highway and mass-transit systems. As a result, there are now huge shortfalls in infrastructure, with many transportation projects having to be pared down or eliminated.
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THE MEDIA have focused on the fact that rising gas prices are causing people to cancel vacations, or take “staycations,” a theoretical vacation at home. Of course, that’s if they’re lucky enough to get a vacation at all–a report by the Center for Economic and Policy Research last year showed that only one-quarter of U.S. workers get paid vacations.
Far more than just disrupting vacation plans, however, high gas prices are impacting people’s abilities just to get by.
In June, three-quarters of voters responding to a Washington Post-ABC News poll said prices at the pump were causing them financial hardship. Fifty-one percent said it was a serious financial hardship–the first time since the poll began eight years ago that a majority answered yes.
“What can you do? You need gas,” Barry Modeste, a construction worker who stopped his van at a Shell station in Takoma Park, Md., told the Post. Modeste put in only enough gas to get him to a cheaper station in Rockville. “If you don’t have gas, you can’t get to work,” he said. “And if you can’t get to work, you don’t get paid. And if you don’t get paid, you can’t buy food. We’re at their mercy.”
The rise in oil prices has also helped spur the rising cost of food, since nearly every aspect of modern farming–from fertilizer production to the harvesting and transportation of crops and livestock–is impacted by rising fuel costs. In many places across the country, more people are looking for emergency aid from food pantries and aid agencies as they get squeezed by rising food and gas prices.
Larry Brown, executive director of CityCare, a nonprofit aid organization, told the Oklahoman that the number of people showing up for a weekly grocery giveaway at a downtown church in Oklahoma City has doubled for the first time in the organization’s 16 years. “I don’t know if it’s the gas prices, and I don’t know if it’s the grocery prices, but it’s been through the summer,” he said of the increase.
And in Idaho, where the South Central Head Start Program serves 600 kids–with another 800 on the waiting list to get in–the program is being forced to cut back because of fuel costs. “[W]e transport our children,” South Central Idaho Head Start Director Mary Marshall told KMVT News. “We cover 17,000 square miles in south central Idaho. It’s a lot of ground to cover.”
In some rural communities, where residents have to drive more as a matter of course, and incomes are typically lower, higher gas and diesel prices have been disastrous.
In the town of Allen, Neb., residents must drive 11 miles to get to the nearest gas station. And since the town’s only grocery store went out of business last year, they also have to drive more than 20 miles to get to the nearest alternative. With high gas prices, Allen resident Shelly Jones told USA Today, “You’re almost forcing the rural communities to shut down.” Jones recently quit her job in Sioux City when the commute became too expensive.
People in cities and suburbs are cutting back as well. School districts, for example, are cutting bus service for students due to budget shortfalls. Some businesses and colleges–and even some city and county governments–have moved to operating on a Monday-Thursday schedule to save on energy costs for businesses and commuting costs for employees and students.
Student Melissa Pate, who commutes more than 100 miles round trip from her Fort Lawn, S.C., home to classes at York Technical College and then to work, told the Associated Press that she was glad when the college dropped Friday classes, reducing her school week from three days to two. “Without that, I wouldn’t have been able to afford to go to school,” she said.
The Bush administration continues to cling to the idea that we aren’t officially in a recession. But for many workers, it feels like one, and has for a while.
As retired elementary school teacher Carol Netzel told MSNBC, “It doesn’t matter what the economists say. All the people I chat with at the grocery store, the gas station, shopping for school clothes, all are feeling very depressed because of the beating their budgets are taking.”
A recent study by the Pew Research Center found that 45 percent of the public, compared to 24 percent in February, say rising prices are the biggest economic problem. Nearly two-thirds say their incomes are lagging behind their living costs. Seventy-two percent said they believed that the country is already in a recession. Sixty-eight percent surveyed said they are scrambling to cover the cost of gasoline. And 38 percent say it is difficult to afford food, compared with 27 percent in February.
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THE BUSH White House, of course, barely admits there’s a problem. In March, when he was asked by a reporter about what advice he’d give an average American faced with the prospect of $4 gallon gas, the President responded: “That’s interesting. I hadn’t heard that.”
Bush has heard of $4 a gallon gas now, but his advice for working people? Drive less, cut back and have faith in the system. “The consumer’s plenty bright,” Bush said at a July news conference. “The marketplace works…People can figure out if they should drive more or less…It’s a little presumptuous on my part to dictate how consumers live their own lives.”
But, of course, how ordinary people live their lives is dictated by a system where the priority is on profits, not meeting human needs.
For its part, Congress passed an “economic stimulus” package that didn’t even cover a month’s rent–not to mention a month’s mortgage–for most people in the U.S., and a housing bill that won’t save the houses of most of the people who face foreclosure.
John McCain–a man who admits that “[t]he issue of economics is not something I’ve understood as well as I should”–is calling for the Bush administration tax cuts for the wealthy to be made permanent. In other words, another round of “trickle-down economics,” where nothing ever trickles down to workers.
McCain also says he would lift the ban on offshore oil drilling, which even experts admit will not only take years to produce, but will add only a tiny fraction to the pool of the estimated 21 billion barrels of oil the U.S. consumes each day–not to mention the environmental destruction it will cause as well.
It’s no wonder that campaign contributions from oil industry executives to John McCain spiked in June, to $1.1 million in that month alone.
Democratic contender Barack Obama, meanwhile, has gotten a lot of traction criticizing the profits of oil companies and promising to stand up for workers’ rights. In a recent Obama campaign ad, a narrator warns, “Every time you fill your tank, the oil companies fill their pockets…Now Big Oil’s filling John McCain’s campaign with $2 million in contributions.”
But Obama has accepted more than $213,000 in campaign contributions from individuals who work for companies in the oil and gas industry and their spouses.
Obama does call for high-income individuals to pay taxes at the rates that applied prior to Bush’s tax cuts, but that’s only a tiny step toward addressing inequality in the U.S., which has reached the highest levels since the 1920s. Today, the richest 1 percent of Americans now possesses about 22 percent of the nation’s wealth, and the top 10 percent control 48.5 percent.
The Obama campaign has also released details of an “Emergency Economic Plan” to provide an emergency energy rebate of $500 to individual workers and $1,000 to families, funded in part by a tax on windfall profits from the oil companies.
Yet as journalist Matt Taibbi noted in Rolling Stone, big donors are betting that Obama’s talk about taxing the rich and corporations is just that–all talk:
Those worried that Obama might be all talk when it comes to needed reform had a real scare in July, when the senator failed to show up to vote for the Stop Excessive Speculation Act, a bill designed to curb rampant oil speculation.
Oil speculators provide the perfect microcosm of what happened to the economy under Bush. Back in 2001, investment banks like Goldman Sachs and JP Morgan got together and created an online exchange called the ICE for trading energy commodities…Trading on the ICE had a massive impact on U.S. gasoline prices, and more than one legislator wondered if energy speculators were manipulating the market, as energy traders like Enron had been before.
The speculation bill was designed to regulate the ICE and place limits on trades. But on the day before Obama returned from his eight-day, eight-country, mega-dazzling international photo op, Democrats failed by a vote of 50-43 to force a vote on the bill, as heavy lobbying by investment banks like Goldman Sachs torpedoed the effort.
Taibbi describes the system in no uncertain terms:
The truth is that the campaigns of both Barack Obama and John McCain are being inundated with cash from more or less exactly the same gorgons of the corporate scene.
From Wall Street to the Big Oil powerhouses to the military-industrial complex, America’s fat-cat business leaders know that the Animal House-style party of the last eight years that made almost all of them rich with bonuses, government contracts and bubble profits is about to come to an end, and someone is going to have to pay to clean up the mess. They want that someone to be you, not them, and they’ve spared no expense to make sure both presidential candidates will be there to bail them out next year.
They’re succeeding. Both would-be presidents have already sold us out. They’ve taken the money and run–completing the cyclical transformation of the American political narrative from one of monopolistic Republican iniquity to an even more depressing tale about the overweening power of corporate money and the essentially fictitious nature of our two-party system.
NICOLE COLSON lives in Chicago, where she works as a reporter for the Socialist Worker.