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Break Up Big Oil

This summer, the price of gasoline had skyrocketed in the United States in a few short months to $4.50 a gallon. The oil companies were claiming the fault was China and India going car-crazy and guzzling up gas, problems in the Middle East, then it was refinery capacity and, all along, if the ban on drilling in areas on the continental shelf offshore was only lifted, everything would be different.

Filling up a car, at 40 or 50 bucks a shot, was hurting people badly. And it was impacting on the economy. The oil companies were raking in record, indeed obscene profits—billions upon billions of dollars. People were getting angrier and angrier thinking that some kind of price-rigging was going on.

Then, suddenly, just in recent weeks—the price of gas went down and down. Now it’s about half the price a gallon it was in the summer. The price of a barrel of crude oil has dived—from a high of $145 a barrel in July to as of this week less than $60 a barrel.

And people are still car-crazy in China and India, problems continue in the Middle East and no new refineries have been built in the last several weeks. As to that ban on drilling on the continental shelf offshore, it was lifted by Congress—but, according to the U.S. Energy Information Administration, if drilling starts ASAP, it wouldn’t “have a significant impact on domestic …prices before 2030.”

Would you believe? Do you think the oil industry is manipulating the market, grabbing our money to make windfall profits and is deep in deception?

I’ve thought so for years.

Decades ago I received my first lesson in oil industry honesty—an oxymoron—when I broke the story of the oil industry exploring in the Atlantic. I was a reporter for  the Long Island Press, and I got a tip from a fisherman out of Montauk who said he had seen the same sort of vessel as the boats he observed searching for oil when he was a shrimper in the 1940s in the Gulf of Mexico.

I spent the day telephoning oil companies. Public relations people for each said, no, we’re not involved in looking for oil in the Atlantic. I was leaving the office when there was the yell that a public relations man from Gulf was on the phone. The PR man at Gulf’s headquarters in Pittsburgh said he checked and, yes, Gulf was involved in searching oil in the Atlantic—in a “consortium” of 32 oil companies. These included the companies that all day issued flat denials.

Later on, I looked into whether offshore drilling was really as safe as the oil industry claimed. I visited the first rig set up in the Atlantic—off Nova Scotia.

Some safe. My article began: “The rescue boat goes round and round…as the man from Shell concedes, ‘We treat every foot of hole like a potential disaster.’” On the rig were capsules to eject crew members in an accident. “Workers may all be kept in one piece, but erupting oil won’t, the man from Shell admits.”

The Shell executive acknowledged that “curtains, booms and other devices the oil industry flashes in its advertising ‘just don’t work in over five-foot seas.’” So, he said, there are “stockpiles of clean-up material on shore. Not straw as in the States. Here we have peat moss.”

As the President’s Council on Environmental Quality in a report on offshore Atlantic drilling later stated: “A major spill along the beaches of Cape Cod, Long Island or the Middle or South Atlantic states could devastate the areas affected…the Atlantic [is a] hostile environment for oil and gas operations. Storm and seismic conditions may be more severe than in the North Sea or the Gulf of Mexico.”

That’s why there was that prohibition on drilling on the continental shelf for 26 years—as of now, as a result of our most recent oil crisis, gone.

Meanwhile, the price of gas has come down with about as much logic and sense as it went up. One of the best clues to a part of what has happened was a mention in a front-page piece in the New York Times on June 14. “Plan Would Lift Saudi Oil Output,” was the headline, about Saudi Arabia increasing its oil production. There in the fourth paragraph was the statement that the Saudis were concerned that “current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy.”

I’ve seen no mainstream media investigation into the wild gyrations in the price of oil, the Great Gas Rip-Off of 2008.

In her fine new book, The Tyranny of Oil: The World’s Most Powerful Industry—and What We Must To Do Stop It, Antonia Juhasz, writes: “The masters of the oil industry, the companies known as ‘Big Oil,’ exercise their influence…through rapidly and ever-increasing oil and gasoline prices, a lack of viable alternatives, the erosion of democracy, environmental destruction, global warming, violence, and war.”

She cites a Gallup poll on “public perceptions of U.S. industry” and reports that the oil industry “earned the lowest rating of any industry.”

Americans are on to the oil industry—and we all need to do a lot about it!

A full-scale investigation (perhaps by Congress, although the dependence of its members on oil industry campaign contributions make any tough, thorough Congressional probe questionable), or by criminal prosecutors (on the federal level, that’ll have to wait for the Obama administration considering the intimate links of the Bush administration to the oil industry), through lawsuits or some other mechanisms. Big Oil in the United States needs to be broken up as it was by the U.S. Supreme Court nearly a century ago after the muckraking of Ida Tarbell, but this time the requirement of competition must hold.

And we need to consider whether the production of petroleum in the U.S. should remain with a bunch of hyper-greedy corporate liars. “Most countries in the world place ownership and control of oil in the hands of the public,” notes The Tyranny of Oil. “Doing so in the United States would simply put us in line with the majority of people on the planet.”

KARL GROSSMAN is a professor of journalism at the State University of New York/College at Old Westbury, author of books on energy and the environment, chief investigative reporter at WVVH-TV and host of the nationally-aired television program Enviro Close-Up (www.envirovideo.com).