The Oily Monopoly Part I - A Brief History of how the Oil Company Cartels have perpetrated Dependence on the Black Crack.
Cross posted at Conceptual Guerilla
One of the greatest myths perpetrated by the Reactionary Ripoff Republicans, a.k.a Cheap Labor Conservatives, is that of the "free market" in America. There are numerous examples to disprove this "flat earth theory" of the reactionary ripoff boys, but few are more glaringly obvious than the sordid history of the US petroleum based economy, beginning as early as the 1920s. Tacit, or even overt government enabling of this industry has been the name of the game since then, with the result that this industry virtually runs the country, reaching its apex in the Bush II regime, where at least 3 of the top 5 in that "administration" are former oil men or women.
From Teapot Dome, to the destruction of urban mass transit, to the interstate highway system, to the contrived and well timed oil shortages beginning in the 1970s, the suppression of solar and wind energy, the suppression of plant based renewable fuels, and an emphasis on materials based on oil and not from recyclable or renewable materials derived from plants or metals, and finally wars to ensure control over oil supplies, the oiligarchs have been one of the main driving forces behind the US crony capitalist economy of waste.
The fact that other nations have been more forward thinking than ourselves and that alternatives to oil have existed for years, is conveniently ignored by the corporate mass media, who has a vested interest in perpetrating the fossil fuel monopoly. For example, we hear little about how Brazil and Sweden are weaning themselves from fossil fuels via government incentives, but these countries are "socialist" and hence not worth using as examples for us. Finally, the corporate media never ceases to emphasize the fact that Americans are so fortunate to be paying half that of Europeans for a gallon of gas, while conveniently forgetting the fact that many Europeans do not even need cars and gasoline because of their excellent transit systems and sensible site development.
Let's take a trip in the way-back machine and follow the history of the big oil monopoly. Government corruption and giveaways to Big Oil began as early as 1923 with the Teapot Dome scandal, in which government oil reserves earmarked for the Navy were given away to Sinclair Oil by Warren Harding's secretary of the Interior in exchange for personal favors and financial gain. So began the Reactionary Ripoff Republicans giveaways and special favors to this industry, although other special favors to extractive industries, including oil began even earlier with excrescences such as the 1876 mining law (under U.S. Grant) which virtually gave away claims to government and other lands to the energy and extractive industries for $5.00 an acre if they found "important" resources. This example of corporate welfare is still on the books (!).
Prior to World War II, the automobile had just begun to be popular and affordable to less than wealthy Americans. However, particularly in inner cities, rail transit, including electrified light rail trolleys continued to be a viable and affordable option that provided an alternative, and farms in the `30s used little in the way of fossil fuel based fertilizer and mechanization. Many even used wind power. Our massive oil dependence had not yet built to true fruition, and several alternatives could have been pursued at this point to preserve freedom of choice in energy and transit. The 1930s saw the advent also of plant based plastics, from soybeans and hemp. These were considered substandard and research into them stopped as soon as petroleum based plastic feedstocks became available around World War II.
After World War II, it seemed as if the US could do no wrong. Blessed with cheap and plentiful domestic oil, the oil and automotive industry proceeded to foreclose alternatives to the car-petroleum-highway complex. Mack Trucks, GM, Firestone and Standard Oil created sham holding companies to buy out the electrified tracks, a process which began in the 1920s. The trick was to buy only the products offered by these companies to replace the trains, which were junked. Bribes such as Cadillac automobiles were offered to city officials as incentives to abandon electric rail transit. The oil, car and tire companies were convicted of conspiracy and bribery, but were each fined $1000.00 as the punishment. Readhere for the juicy details. This is akin to giving a murderer 30 days in jail followed by expunging his criminal record. The final result of this destruction of alternatives was basically a gutting of intra-city rail transit by the early 1950's everywhere except for New York and downtown Chicago. Even these cities had rail transit cut-backs. The Eisenhower-initiated massive government subsidy of the interstate highway system reduced the comparative advantage of the intercity rail transit alternative, and by 1970, all intercity private passenger rail had basically gone out of business, the shells of which were taken up by the chronically underfunded and maligned Amtrak, which the oily monopoly capitalists in the U.S government are constantly trying to eliminate. Other private railroads, for example, in Chicago, where commuter rail service was threatened with extinction in the early 70's, had to be bailed out by a forward looking Illinois governor, Richard B. Ogilvie.
By 1970, the peak of domestic oil production had been reached in the U.S., and from that day forward, foreign oil captured an increasing share of the U.S. oil supply. Foreign policy from then on increasingly focused on securing access the Middle East oil supply, the capstone of which was Bush I and II's wars in Iraq, although a trial run began as early as 1953, when CIA forces helped destabilize the democratically government of Mossadegh in Iran in favor of the U.S puppet government of the Shah, leading to blowback and repercussions that continue to this day. All because the Mossadegh government had the temerity to nationalize its oil resources and kick out the foreign oil extraction multinationals.
To paraphrase Smedley Butler, wars these days are a natural resource racket designed to satisfy the economic needs of ExxonMobil. No one can tell me that $1 trillion spent on renewable and alternative energy sources, instead of a war of hegemony in Iraq would not have completely eliminated US dependency on Middle Eastern petroleum supplies.
The 1970s saw the first oil price shocks, that Americans were extremely unprepared to face. The rail system had been gutted, suburban sprawl was in full swing, and the result was a massive hit to the economy by the late `70s. The only president with the courage to face these issues full-on was Carter, who envisaged an economy energized by renewables and alternative sources. Government dollars were poured into this area, with tax breaks for conservation including insulation, passive and active solar. The response of the oil industry was full-spectrum disruption of the economy. Under the guise of the Iran crisis of the overthrow of the Shah in 1979, a convenient excuse was handed the oil companies. Oil supplies were massively constrained, and gas lines and rationing was the result. I observed this first hand and also on the news, where refineries were closed down and the Chesapeake Bay near the oil terminals filled up with tankers full of oil, waiting to be off-loaded for refining. Many of these ships were anchored for weeks or even months. Prices of gasoline more than doubled in a few months, attaining the equivalent of $3.25 a gallon in 2006 dollars in 1980. The resulting double-digit inflation all but assured the electoral loss of Carter, with the October Surprise and the botched hostage rescue mission (probably caused by defective helicopters) dealing the coup de grace. Mission accomplished for the oil companies. With their stooges Ronnie Ray-Gun and Bush I comfortably ensconced in the White House, prices remained high for a couple of years, then plummeted. By then the solar panels had been pulled down from the White House and most of the government programs to support renewables and conservation, along with higher fuel economy standards had been rescinded. Another era of feel good cheap oil lasted until the year 2000, when prices again spiked, conveniently timed for another election in order to discredit a presidential candidate who was again talking up renewables and conservation (remember how he was tarred "Ozone Man").
Part II will detail the current state of the oil monopoly and how the status quo of the energy monopoly continues to be perpetrated via greenwashing and lip service.to the environment. Locally based alternatives will continue to be pooh-poohed and underfunded, with the aim to retain the power of the energy monopolists over the American people. That is why nuclear energy is so popular among the reactionary ripoff boys, is that it is a centralized technology dependent on Big Capital, and disempowers the consumer who uses it. The Federal Government at this time exists at the sufferance and beck and call of Big Oil and Big Energy.
Also see this for a quickie intro to peak oil. I will be delving into that topic as part of the Oily Monopoly Part II.