It's the Economy...

by Keith Cooper

From Broader View Weekly, July 18, 2008

With gas prices over $4.00 a gallon in this election year, each candidate is seeking politically expedient “solutions” to the problem. Unfortunately, none of the solutions receiving any attention addresses the core of the issue. Imposing a specific tax on oil companies won’t bring down gas prices. Attempting to “flood” the market with a greater supply of domestic oil will not bring down gas prices.

The fact is that our economic model has brought about this crisis. It is naïve to think that applying those same principles to this problem will bring about positive change. As long as we choose to consume our resources without thought to the consequences, we will continue to pay for our extravagance.

I am no economist, but I do understand some of the factors that have contributed to the current dilemma. One, which I have mentioned in this column before, is that oil companies, like all corporations, are in the profit business. Their legal responsibility is to the shareholders. Therefore, there is little incentive to increase supply enough to bring down prices (thereby limiting profitability). We know from internal industry memos that when the market was rich in supply and prices were lagging, oil companies closed refineries to control supply. We cannot trust these corporations to turn increased domestic oil supply into savings at the pump.

Last month, Congresswoman Maxine Waters misspoke during a House hearing on the issue. She mistakenly used the word “socializing” to describe nationalizing the oil industry. Fox news and pundits on the right lost their minds. The message spread quickly about how the left-wing Democratic party was hell-bent on turning the United States into another Venezuela. This is a great example of how we are programmed to view certain words, such as “socialized” or “nationalized,” as intrinsically evil, or counter to our values. I believe that Waters was simply pointing out that dependence on oil at the consumer level makes a “free market” solution to the problem unrealistic. She knew that opening up domestic oil exploration was no guarantee that prices would come down.

I also know that no resource is unlimited. If we have not yet reached peak oil (the point at which production rate declines dramatically in contrast to the rise of demand), we will soon. No amount of domestic exploration will allow us an indefinite supply of oil. John McCain has described his politically convenient change of course on domestic drilling as a way to meet the immediate supply demands while feasible alternatives are being developed. The problem with this theory is two-fold. First, the proposed exploration provides no immediate relief to supply shortages, as impacts will not be realized for years to come. Secondly, alternative technologies have already been developed to meet the challenge, but the climate in the automobile and oil industries have been hostile to their threats. While great progress has been made in developing fuel cells and batteries to power electric vehicles, lack of political will and auto industry collusion has prevented real solutions from taking shape.

Perhaps most detrimental to our plight is our failure to think of the problem in progressive ways. We, in the United States, are enslaved by our belief in the sanctity of capitalism. We cherish our ideologies at the expense of our welfare. We somehow believe that an open and free marketplace will bring prosperity to many with no great sacrifice. We believe in quick fixes and band-aid solutions. Our failure to reevaluate our economic model will be our undoing.

When James Carville coined the phrase “it’s the economy, stupid,” in 1992, he wasn’t referring to our economic philosophy. However, it is our adherence to this system that has created the current level of misery. Gas prices are just one symptom of the disease.

What we need as a nation is a real solution to our dependency on oil. We do not need campaign promises to shift the tax we pay on a gallon of gas to the corporations that are making insane profits off of our misfortune. We do not need to bleed our domestic resources or rape our national treasures. We do not need to flex our military muscle in a region that has claimed the lives of thousands of our sons and daughters. We do not need to assign blame to a certain party or member of Congress.

What we need to do is reflect on our consumer-driven lifestyle. We need to turn our gas-guzzling SUVs into vehicles that efficiently consume resources. We need to make rational decisions and conserve in a practical manner. We need to wake up to the fact that one planet will not provide for our rate of consumption for very long. We need to accept that sacrifices will need to be made and that today’s gas prices are only the beginning.

No action taken to address this crisis will provide immediate relief. However, if political leaders begin standing up to powerful oil and auto industry lobbyists, an incentive to apply alternative approaches will result. If common citizens curb consumption, even out of necessity rather than conscience, a shift in market power will come about. If we stop buying the lie of capitalist idealism, the government, media and punditry will stop feeding it to us. If we refuse to accept the status quo, we can achieve real change.