Lessons from American history help us understand oil crisis
When you’re in a hole, quit digging: a sound piece of wisdom—practical, simple, and obvious in its allusion for anyone who has ever used a shovel.
It holds true unless the digger intends for the hole to be deeper, literally and figuratively. That is the case of the extraction industries. Their goal is to keep digging or, in this case, drilling in order to keep the rest of us addicted to their products.
With the surge in gas prices over the past few years, the question has been at what price-per-gallon Americans would cry “Uncle!” Now we know: The $4-per-gallon mark seems to have been the tipping point, the psychological cliff over which panicked drivers have plunged.
There is one problem with the logic of more drilling: the anticipated relief in prices simply won’t happen.
Recent Courant letter writers have delineated the fallacies of the argument that we can drill our way to independence from foreign oil or even get short-term relief. History, as well, offers us a clear lesson about what this is all about.
Capitalism is generally confused with free enterprise and correlated to democracy. But what is often the case, capitalism can be a closed and undemocratic system. Monopolies, trusts, and cartels are historical parts of a capitalistic system.
President Bush’s has said, “Wall Street has gotten drunk.” It sure has, and he should know since he has been the bartender serving the drinks without concern over the condition of the inebriated tipplers.
President Theodore Roosevelt, a Republican, took on the moneyed drunks in America’s first Gilded Age. Times have obviously changed.
Rudolph J. R. Peritz, a professor at the New York Law School, writes about how the Congress of the period stood up against the growing might of the burgeoning industries, especially oil dominated by John D. Rockefeller though his Standard Oil.
Rockefeller’s fellow Ohioan Sen. John Sherman managed to get enacted in 1890 one of the landmark pieces of legislation in American history, the Sherman Anti-Trust Act.
The debate about the efficacy of trust, monopolies, and cartels in our economic system was viewed differently then as it is now.
Peritz writes, “Rhetorically, they were both speaking in favor of ‘free competition.’ But free competition held different meanings for them. For Senator Sherman, it signified competition free from domination by private economic power. It meant that free markets require limits on monopolies, cartels, and similar economic restraints. Rockefeller believed in competition free from government regulation and called for an absolute freedom of contract.”
Peritz clarifies the concept of a cartel: “a group of competing companies that have agreed to set prices or take other measures to limit competition among themselves.”
Today we note the obscene profits of Exxon-Mobil, which was once Exxon and Mobil, until they merged in 1999, nearly a century after the 1911 Supreme Court ruling that broke up Exxon’s granddaddy company, Standard Oil. In some states, the company became known as Esso, from S-O: Standard Oil of New Jersey.
Immediately after the Exxon-Mobil merger, Chevron bought out Texaco in 2000. Then in 2006, Conoco and Phillips merged to form ConocoPhillips.
Keep in mind that with corporate consolidation an economic dictatorship arises just like a political oligarchy ruling without fear of competition. China is the model for that in today’s world: a capitalistic dictatorship.
Our economic history can be viewed in part through the lens of the war between the two competing Rockefeller-Sherman interpretations of free enterprise: the moneyed powers, free of government intervention, seeking to consolidate their control over capital, production, and distribution; and that of governmental intervention, obstructing the barons’ drives in the name of true competition.
That is unless the government itself becomes a tool and lackey of the corporate world, up to and including placing one of their own in the presidency.
When Roosevelt was President, George Santayana wrote in The Life of Reason, “Those who do not remember their past are condemned to repeat their mistakes.”
Bush played on the natural fear of the American people after the attacks on September 11 to convince them of the need to invade Iraq.
That same strategy is in play today: Big Oil, with support from Bush on his Bully Pulpit, is using the same tactic—this time, the cost of gas at the pump—to get its way to secure leases of the last untouched pieces before their boy leaves office.
Conspiracy? No, business as usual for the tycoons.