WASHINGTON – In just the last 60 days, the media has
cited oil companies for “price gouging” in no less
than 285 articles and TV broadcasts, a search of the
Nexis database shows.
“Consumers are getting ripped off,” Sen. Paul
Wellstone, D-Minn., was quoted as saying in major
papers. “Screwed” is more like it, says Fox News
Channel’s Bill O’Reilly on his top-rated show.
Senate Democrats “should look at the price gouging
going on in the oil companies,” urged Nation editor
Katrina vanden Heuvel on CNBC’s “Hardball with Chris
Matthews.”
Now go back 10 years to the oil bust and count the
number of stories complaining about oil companies
undercharging consumers. You guessed it, there
were zero.
The number of stories about consumers taking advantage
of oil companies? Zero.
But Americans, who have famously short memories, had
it easy at the pumps back then – precisely because
oil companies had it hard. Depressed prices led to
record financial losses – and layoffs (speaking of
victims).
In fact, no industry – including auto manufacturers
– suffered more layoffs in the last recession than
U.S. oil and gas producers – nearly 70,000 from July
1991 to July 1992 alone.
And from 1982 to 1992, the oil industry had to cut
more than 450,000 jobs – roughly the population of
Austin, Texas – according to the American Petroleum
Industry.
Most of the cuts came during the bust of the
mid-1980s, when crude prices plummeted to $9 a barrel.
Then employment bottomed in 1989 and even picked up in
1990, as both independent wildcatters and major
producers were lured back into the oil fields by Gulf
War-led prices that got as high as $40 a barrel.
But demand proved short-lived, thanks to the sluggish
economy, and prices returned to low levels.
Where was the press when independent producers were
going out of business and the industry was losing
money? There were few such sob stories then.
In 1992, moreover, domestic oil production sank to the
lowest level in more than 30 years. And drilling
activity hovered around 650 rigs nationwide – down
from more than 3,000 in 1982, the industry peak, and
the lowest level since 1940, according to Baker Hughes
Inc.
It wasn’t just low demand that slowed drilling – and,
in turn, the nation’s supply of oil and gas. It was
also a rash of environmental restrictions, and
consumers can blame that for much of today’s “price
gouging.”
Companies paid a lot of money for leases to drill off
the West Coast, primarily California, but a moratorium
prevented them from producing anything.
They also had to close or downsize refineries because
of new regulations requiring them to meet costly
standards for reformulated gasoline and other
clean-burning fuels. (The rules were OK’d, ironically
enough, by President Bush’s father under the Clean Air
Act of 1990.)
So capacity has fallen, and demand has rebounded and
is now at a summer peak, leading to an energy shortage
that once-beleaguered oil companies are now
capitalizing on.
Well, folks, that’s called capitalism. Deal with it.
Only today, everyone’s a victim group to be protected,
even yuppie commuters and vacationers. If you’re a
day-tripper who has to pay, horrors, $2 a gallon to
top off the SUV, you’re a victim of a greedy
conglomerate. Call the whaaambulance!
Here’s a quick business lesson: Oil companies are in
business to make money. Period. They aren’t a charity,
and energy isn’t another extra-constitutional
entitlement guaranteed by Washington. If oil companies
can make higher prices stick, they will, just like any
other business in a free market.
Have we become so spoiled as a free people that we
can’t even withstand for a few summer months the
vicissitudes of the capitalist system that affords all
of us our economic freedom, not to mention our own
opportunity to legally make big profits? Shame on us.
