Our financial challenges can not be solved by government alone. In response to very high gasoline and diesel prices, the president is talking about more drilling for oil and opening up areas to drilling that could lead to environmental chaos. Any impact on oil prices would not incur for a long time and does nothing for the large increases in energy demand in China and India.
Oil production in the US has the benefit of reducing our dependence on other countries. On the other hand, oil that remains in the ground is something of a long term investment. The longer we wait to produce our own oil (ours, not big oil’s) the more valuable it will be when we do.
Much of the talk about oil prices has ignored what was presented in an article in the May 15 Times-Call; “Speculation explains oil price hikes”. Speculators have had a large impact in the market place and thus on prices. An increasing percentages of oil is “purchased for resale” by speculators. They buy and sell oil and make hundreds of billions of dollars. Their dollars come from you when you fill up. These speculators are the Wall Street companies and big banks that were central to the market fall and current recession. Speculators purchase about 70 percent of produced oil. Speculators provide a useful service to a point. At 30 percent or less of the produced oil, it apparently does not allow for bilking the rest of us so easily. While this is not the whole story around oil prices and the value of the dollar has a significant impact, it is absolutely not irresponsible to talk about this contribution to oil prices, inflation, and impact on the poor.
Big oil has benefited from this unbalanced market place. So have some foreign countries that do not have our interests at heart (we don’t like it so much when the shoe is on the other foot.) Republicans and Democrats are now arguing about ending a $2 billion a year tax break for big oil. Big oil claims they invest in renewable energy and make a relatively small percentage on income. Well that depends on what you calculate, but to me, the tens of billions of quarterly profits derived from the rest of us does not create much sympathy.
I remember in school learning about the robber barons and what a terrible thing that was. Interestingly the grandson of one of the robber barons is among those trying to bring some sanity into the discussion.
One might think of price gouging as a form of taxation with little or no benefit to the larger public. It is also worth noting that the same people who want to keep giving $2 billion per year to big oil want to defund early childhood education, public television, Planned Parenthood, etc. based on “purely budgetary considerations”. Brooklyn Bridge anyone?
Not all of our economic woes can be blamed on big business. However, many large businesses appeared to be governed foremost by maximizing short term and sometimes midterm profits. Businesses do need to turn a profit long term. However, there is a responsibility to the country and its residents. This includes jobs, jobs security, and living wages. It is hard to act in a socially responsible way with the primary, and sometimes only, focus on maximizing profits. Especially, when strategies include overworking reduced staffs, avoiding taxes with zeal, lobbying for still another tax break, off-shoring jobs, hiding money in overseas accounts, and sometimes just plain fraud. Salaries and bonuses of many large companies including banks and Wall Street firms grossly exceed what is necessary to provide economic security for one’s family including the next several generations.
It is unlikely that much of this will change any time soon. One step would be to reverse Citizens United and only use public money for elections. The money spent on campaigns and lobbying far exceeds the monies that benefit the poor and lower income that are the victim of the last round of budget negotiations. Both parties are playing a game that is very destructive to the future of our country.
If big businesses operated in a more balanced fashion, we would have less need for entitlements and there would be substantially more fair tax revenues.
Beware legislation that is sold for one purpose but benefits the few, such as some of the proposed changes to Medicare.