I saw Larry Summers on television today. That says all you need to know about the corporate media’s state of discourse on the economy. The Democratic leadership in Congress is like a deer in the headlights – they are just effing doing nothing. Didn’t they have at least two shots at reconciliation? Has it occurred to any of them that they should pass something under the Byrd rule, seeing as they plan on leaving the filibuster intact?
I suspect the answer to these questions is a resounding no, and I suspect the reason for that answer may be, well, Larry Summers. The austerians appear to be winning the day in the Biden Administration and the Democratic-led Congress. They are afraid of spending money on anything apart from the military, which is the beneficiary of lavish amounts of public funds in excess of $800 billion per annum.
The notion that social spending is responsible for recent price rises is simply laughable. There are other, more likely causes.
Pumping profits straight from the ground
Gas prices are an obvious driver of inflation. The price at the pump is somewhere around $5, the highest they’ve been perhaps ever. The thing is, crude oil prices are not at a record high, not by any means. Oil peaked in 2008 above $140 a barrel, and yet gasoline in the U.S. was selling at about $4 a gallon. Right now oil’s around $108 a barrel. So …. what gives?
One big factor is refining. During the pandemic, oil refining capacity in the United States fell about 5%, from over 19 million barrels in 2019 to less than 18 million. This was because there was less domestic travel due to COVID, which meant less demand for oil. Now that demand has shot up like a rocket again, the oil refining capacity in the United States is simply not sufficient to meet the need.
Why not reopen some of that refining capacity? Well …. that would mean more supply, lower price, less profit. Get the grift … I mean, drift?
From every misfortune a fortune is made
Why are prices rising? Over the course of 2021, corporate profits were up by more than 25%. There’s some serious profit-taking going on here, obviously. While everyone else was struggling to get through the pandemic, these fuckers have been cleaning up. Jim Hightower talks about Proctor and Gamble’s diaper business, an industry they and maybe one other mega corporation have a corner on:
Procter & Gamble Co. announced a year ago that COVID-19-driven production costs were forcing it to raise the price for its Pampers brand. At the time, it had just posted a quarterly profit of $3.8 billion, so P&G could easily have absorbed a temporary rise in its costs. But instead of holding the price to ease their customers’ economic pain, the conglomerate used a global health crisis to justify upping diaper prices. Six months later, P&G’s quarterly profit topped $5 billion. And—in that same quarter—P&G spent $3 billion to buy back shares of its own stock.
Just one of many examples. Bottom line is, as working families are stripped of the modest benefits they received from the Child Tax Credit, they must now contend with rising prices driven by the greed of monopolistic companies that contribute heavily to our leaders’ campaign coffers.
Asleep at the wheel
Why isn’t the mainstream press reporting on this? Too busy reporting on the many challenges of air travel – Turmoil at the Terminal! As I’ve mentioned previously, corporate journalists are disproportionately focused on the airline industry. That’s because they make up the seven percent of Americans who fly regularly (once a month or more). Maybe Jim Hightower should hang out in airports and talk to the correspondents as they wait impatiently for their flights.
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Why? Is it just oil? Well, that’s a complicated issue. Sure, Saudi Arabia wouldn’t have been the center of attention for so long if their chief export had been nutmeg. Their ample supply of easy-to-extract, cheap-to-process crude oil was famously described by our policymakers as a source of enormous strategic power and perhaps the greatest material prize in the history of the world. But it’s that “strategic power” that is the key, as I’ve mentioned previously in these pages. We didn’t need Saudi oil in the 1950s and we don’t need it today, but we do need to have influence and a potential veto over it to maintain our leverage over other nations.
Right, so … Barry let Gulf oil start drilling in ocean recently freed up by the effects of burning hydrocarbons, but that’s okay, because he renamed Mount McKinley and talked about how we’re not moving fast enough on climate change. Yeah, no shit, Mr. President – there’s an obvious solution to that, of course. Stop dragging your own damn feet. Obama’s efforts to address the impending climate catastrophe are progressing so slowly that those glaciers he visited seem speedy in comparison. He should have named that mountain “Denial-ly”.
Living in a tiny little burg in upstate New York as we do, you tend to intellectualize big problems like climate change. Nothing makes it more concrete than an afternoon on the Garden State Parkway or the New Jersey Turnpike. Millions of vehicles in a mad crush, turning the road into a massive parking lot around the major exits, everyone struggling to get just one car length ahead of the next fucker. At one point in a particularly slow-moving traffic jam on a railroad overpass I was flanked by a tractor trailer carrying fuel while beneath us passed one of those amazingly long tanker trains. When no one’s moving, there’s little to do but think, and it’s moments like that when I start thinking … we have a little problem.
Energy refugees. While talking heads praise the fracking-fueled resurgence of America’s energy sector, people in places like Casselton ND are paying the price, driven from their homes in the middle of winter by the dramatic derailment and explosion of a sludge-oil train laden with fracking chemicals. This is the latest in a series of toxic spills as the country hurriedly ramps up production of the last-century fuels that are destroying our atmosphere in pursuit of short-sighted economic growth. Once again, it’s all about jobs, jobs, jobs … if by that we mean, profits, profits, profits for the oil and gas industries and the corporations that support them.
Now, I’m not complaining. Upstate is nothing like Moore, Oklahoma, not by a long shot. But there can be no doubt that the weather here and everywhere else in the country is getting more severe. There is far more energy behind some of these storms than is normal. It takes a few mornings of driving through wreckage to drive home the notion that this may be the new normal. This may be the best we can expect in the years ahead. That is a disastrous prospect.
Make no mistake – this is not an authorless crime. In Iraq and Saudi Arabia, in the Congo, in Indonesia, and in many, many other places, we have used a heavy hand to maintain effective control over valuable resources. And our extractive industries – oil, gas, mining, etc. – have been an integral part of that process. So just understand, if these companies have an eye on all that shale gas, they will use every means available to get to it. I’m not suggesting military force, but everything short of that. They have deep enough pockets to buy politicians, propagandize on a massive scale, and pay off residents enough to divide communities.
This is generally true of the extractive energy industries. Oil is being sought from ocean depths far more profound than either drilling or safety technologies can facilitate. It is being rendered from the tar sands of western Canada, where the very earth is being ground to squeeze every ounce of the precious fluid for export to the U.S., mainly. (As a result, Canada was recently our single largest source of oil.) The volume of global reserves is calculated based upon those deposits that are economically feasible to extract – as the price per barrel rises, more reserves enter the equation. The trouble is, the very act of extracting them from an exhausted mother earth causes as much environmental degradation as burning the oil in generators and vehicles.
Think about it for half a second. When we open leasing on all that real estate again, no matter when that happens, will we have any trouble finding someone to drill, drill, drill? Of course not. What the hell, do they only have one rig? Is Hanna and the PI suggesting they can only drill in one place at a time? Pathetically ludicrous. 
What, objectively, can our government do? Well, a lot more, it seems. Our regulatory mechanisms are mere appendages of the industries they are charged with overseeing. In many cases – such as with the Minerals Management Service- that was the intention. We’ve also just come off of a long period – eight years – of having former oil industry executives in charge of the government. That greatly enhanced the culture and practice of “hands off” regulation specific to that industry – an approach that was generalized to the rest of the economy. So the first thing that needs to be said about this crisis is that it is in large part another parting gift from George W. Bush and Dick Cheney. Just add that to the pile, right next to the financial crisis, the Citizen’s United Supreme Court decision, the continuing wars in Iraq and Afghanistan, and so on. What’s next?