How we can, and why we must, overthrow Big Oil

Since the US passed the peak of its domestic oil production in 1970 and then suffered the indignity of the Arab Oil Embargo of 1973-74, policy wonks and advocacy groups alike have presented no shortage of sensible plans to start breaking America’s dependence on oil.

But every attempt to implement a rational energy policy has failed because because the major oil companies didn’t want America to start using less of their product. And everybody knows that Big Oil owns Washington.

We might imagine this thuggish industry answering in the style of movie gangster Little Caesar: “What’s that? You say don’t like it, punk? So what are you going to do? You and what army are going to say BOO to ExxonMobil, Chevron and BP?”

The most powerful racket ever

The oil industry is the world’s most profitable — and America’s most powerful. And with peak oil, Big Oil is poised to grow even stronger.

With the multi-millions of dollars they spend every year to elect candidates, lobby Congress and federal agencies and spread their messages to the public through front groups like Americans for Prosperity, think tanks like the American Enterprise Institute and slick marketing campaigns claiming the oil companies are going green, the oil industry may seem harder to take down than a consortium of the Corleone family, the Triad Societies of Macau and the Medellin Cartel led by a triumvirate of Al Capone, Bond super-villain Ernst Stavro Blofeld and Tony Soprano.

But Antonia Juhasz thinks it can and must be done. She wants Americans to start fighting back against the oil industry’s control over the federal government. And while we’re at it, she wants us to challenge Big Oil’s control over the corner gas station and the refinery in the poor community down the road too.

And she thinks our best chance to win against Big Oil is to break them up, just like AT&T, or to take them down for corrupt practices, as the feds did with Enron.

Re-assembling Standard Oil

In the iconic case of corporate breakup from the trust-busting era of Theodore Roosevelt, in 1911 the Supreme Court found Standard Oil guilty of antitrust violations and ordered the company to be broken up. The federal government split John D. Rockefeller’s leviathan into 34 companies, including those that later became Exxon, Amoco, Mobil and Chevron.

In the tradition of Ida Tarbell’s expose of Rockefeller and his predatory business practices, Juhasz argues that oil companies have once again started to become as big and powerful as Standard Oil was before its breakup. Indeed, culminating in the merger of Exxon and Mobil, many of the former components of Standard have now re-connected, leaving the world with just half a dozen large independent oil companies.

Juhasz also argues that their massive size has enabled the new oil behemoths to become as dangerous to American democracy as the court found Rockefeller’s trust to be in 1911, particularly when it comes to squeezing out smaller competitors, strong arming their own retailers and running drilling operations and refineries that are dangerous to workers and to neighboring communities.

She also finds Big Oil to be behind Enron-style price fixing that Juhasz sees as a bigger factor in high prices at the pump than supply-and-demand. Though she does acknowledge peak oil, Juhasz is clearly more worked up about speculators and collusion, for which she makes a convincing case. Even if you think that peak oil will be the driving factor behind rising energy prices in the future, it’s easy to accept that in any short-term oil crunch, opportunists will find plenty of chances to squeeze the consumer.

The biggest bar to rational policy

As bad as retail price-fixing and drilling disasters are to drivers, local communities and the environment, if these were the only crimes of ExxonMobil, ConocoPhillips, Shell and the other oil majors, then Big Oil would be no worse than many other extractive industries.

But what makes Big Oil truly a dangerous force is the industry’s influence in Washington, which, more than any other factor, has blocked all attempts over the past thirty years to pass a comprehensive policy on the federal level to move America towards clean energy and conservation.

The US has become what Juhasz calls an “oilgarchy,”

a nation in which a small cadre of oil interests governs the most pressing decisions of our time. Consequently oil and gasoline prices are skyrocketing…But this is just the most obvious tip of a much larger iceberg. As oil becomes harder to find, more competitive to acquire, more expensive to produce, and more polluting to refine, we will be further pressed to decide just how far we are willing to go to get the last drops. Will our climate crisis be expanded? Will communities be destroyed? Will more wars be fought?

At the top of Juhasz’s plan to dislodge the oilgarchy is to get the Federal Trade Commission, using existing antitrust law, to break up the oil majors into smaller companies that would compete with each other and none of which would ever get large enough to put as much pressure on the federal government as the oil behemoths of today can exert.

Other ways to de-throne Big Oil would include electoral and campaign reform, along the lines of the “Separation of Oil and State” campaign run by Washington, DC-based Oil Change International, which notes that the oil industry gave $114 million in campaign contributions to Congress in the last decade, and that “the 111th Congress could be the dirtiest yet.”

Juhasz also urges cuts in federal subsidies to oil companies–which President Obama promised in his 2011 State of the Union speech last month. She also supports reviving industry regulation scrapped in the small government Reagan-era and even starting a national oil company like any number of government-run concerns from Norway to Saudi Arabia that would run drilling and production on federal lands in the public interest rather than for investor profits.

It’s the politics, stupid

The Tyranny of Oil hits the problem right on the head. No amount of sensible clean energy proposals, such as the well-intentioned but politically naive plan recently published by the World Wildlife Fund for the world to run on 95% renewables by 2050, will make much difference as long as Big Oil runs Washington.

We don’t need more clean energy plans. We have enough of those already that just sit on the shelf. What we need are more plans to fight the power of Big Oil.

The environmental movement has already spent too much time painting rosy clean-energy scenarios and lusting after electric cars.

Instead, if green groups went all out into fighting dirty-energy politics, then perhaps America’s energy policy outlook would not be so bleak. The Sierra Club’s campaign against Koch Industries and Greenpeace’s zeppelin flight over a secret strategy meeting of big polluters hosted by the Koch brothers in January are a promising start.

Juhasz’s book is essential reading for anyone who wants to give the US, and indeed the world, a fighting chance to deal with climate change and peak oil while we still have time.

— Erik Curren

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  1. says

    While I agree with the article, I’m somewhat isolated from the opportunity for political action to break Big Oil.

    My personal response is to continue to reduce my personal addiction to oil. This means ordering my life in such a way as to drive less, grow more food, use public transportation whenever possible, and steer away from consumerism.

    • says

      John — Juhasz does also talk about conservation and cutting back on oil as a way to limit the power of Big Oil as well. If more of us followed your example, then we could make a difference, which is the premise behind the Transition movement.

  2. says

    Balderdash. Oil rules because automobiles rule. That’s just an institutional fact, and unless it gets addressed, nothing will change.

    And, by the way, it’s patently preposterous to claim that “subsidies” are keeping the oil corporations going. These monsters are making record record profits. They don’t need any handouts, unless you mean perpetuating cars-first transportation.

    • says

      Michael — You’re right, Big Oil is running record profits and doesn’t need taxpayer subsidies. So why do they fight so hard in Congress to keep the subsidies in place? And of course public spending on roads and automobile infrastructure is also a form of indirect subsidy to oil, as is much of our military spending, which goes to protect oil’s shipping lanes.

      More than 90% of transportation is fueled by oil and when gas prices go up, car usage goes down. I think we’ll continue to see this trend as oil and gas prices start rising again. So that we can still afford to commute to work, America is going to need to start building more practical alternatives to the personal car soon. But as long as Big Oil exercises undue influence in Washington and in many state capitals, rational transportation policies will be very difficult to implement.

  3. Mark Nicholson says

    I believe the transition movement has a much greater chance of success. Peak oil will deal with the big oil corporations better than we can. Sounds like a good read though.

    • says

      I was skeptical before I read the book. But not only did Juhasz convincingly detail the unfair business practices in the industry that I’d only guessed but never known the details of, she also made a very good case for the antitrust approach even with peak oil. I’m like Transition too, but I’m concerned that if the US doesn’t get a reasonable national energy policy soon, it will make it that much harder on our whole nation and on local Transition communities when we start to feel the effects of peak oil more profoundly.

  4. says

    Note : The so called “oil embargo” was never effective towards the US, tankers were going from Saudi Arabia to Vietnam through Barhein, and OPEC raising its price was done fully in line with the US and the majors, in order to be able to start North Sea and Gulf of Mexico oil. You guys should really get over these myths ! On fuel shortages in the 70 started from US production peak, full stop.
    Key guy there was James Akins, unfortunately died one or two years ago.
    But there is a great doucmentary on the whole story from Eric Laurent book “la face cachée du pétrole”, with interviews with James Akins and ex Saudi minister where they are very clear. Documentary only in French and German unfortunaltely, below 2nd part in French :
    note : the “reopen911” logo at the beginning has absolutely nothing to do with the documentary, added by the guy that posted it on dailymotion.

    • says

      There seems to be much controversy about the actual role of the embargo vs other factors in causing the oil price spikes and gas shortages of the mid 1970s. But the bigger issue was the political effect on the American public at the time. Closed gas stations, high prices and talk of rationing caused fear, frustration and anger among American drivers and created a memory of national humiliation at the hands of OPEC that the American public has not forgotten.

  5. says

    Yes but the rationing started BEFORE the embargo and OPEC price rise, it started from the US production peak really, you can check newspapers for instance.
    James Akins were named by Nixon for a report on US prod. Conclusion it’s a mess.
    Then OPEC price rise which was in a BIG part suggested by the US and Akins (especially in a meeting in Algiers), basically because the majors also needed more expensive oil to make North Sea Alaska Gulf of Mexico extraction possible financially speaking.
    Then the embargo that again was never effective for the US, Akins mentions Senators that were starting a campaign to have the US acts against Arab countries, he managed to have them shut up by telling them the truth (no embargo for the US), but the thing was never leaked.

  6. says

    When you realize that most Americans don’t even know the US peaked in 1970, or when they do they will tell you it’s because of the tree huggers or Gaia worshippers and that if regulations were lifted the US could go easily back up above 1970 production level, seems to me could be helpful to put this 1970 strory straight.

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