Wall Street is the best immediate target for a huge protest movement, since it was the freewheeling gambling of big banks that pushed the economy over the edge in 2008 and started the Great Recession.
Now, as Occupy movements pop up around the US and across the globe to draw attention to economic inequity and the government corruption that abets rule by the top 1%, Occupiers should not forget that ExxonMobil is as guilty as Goldman Sachs in buying politicians and squeezing the 99%.
The New York City General Assembly recognized the role of Big Oil in the declaration of grievances against corporations that it put out in late September: “They continue to block alternate forms of energy to keep us dependent on oil.”
Yet, in media coverage of OWS, little attention has been paid to the role of oil companies in tanking the economy. Perhaps it’s because sneering banksters and coke-snorting stock traders are such satisfying and visible targets of middle-class ire over unemployment, home foreclosures and stagflation.With so many people to hate on Wall Street, who has time to notice all the baddies down in Houston?
But while the crimes of Wall Street are very real (if rarely prosecuted), Big Oil may actually be the bigger villain in today’s economic tragedy.
By hooking the public on its product and then continually quashing alternatives from solar power to conservation, the petroleum industry has played a more fundamental role than Wall Street in making the global economy unfair, unsustainable and vulnerable to dangerous crashes — and even catastrophic collapse.
And while it’s easy to finger high flyers at AIG, Bear Stearns and Merrill Lynch for the banking collapse that hit in the fall of 2008, the media has overlooked the underlying cause of that collapse — record high crude oil prices reaching $147 a barrel just a month before the banks started to fail.
“As oil prices soared from $35 per barrel in early 2004 to almost $150 per barrel in the summer of 2008, consumer price inflation in the US tripled to a rate of almost six per cent. It didn’t take long before interest rates caught up to inflation and, in the process, blew up the massively over-leveraged sub-prime mortgage market and the economy with it,” economist Jeff Rubin has explained.
Dollars are backed by oil
Today, the US dollar and all the world’s other major currencies are effectively backed by oil, which they have been since they went off the gold standard starting in the 1930s, as Rep. Ron Paul has so effectively explained. For more than a century, in a world of fiat currencies and ever-expanding credit, cheap oil has enabled an explosion in global manufacturing and trade.
Given how much manufacturing has moved from industrialized countries to China, it’s safe to say that there would be no global economy at all without refined products of crude oil — particularly the diesel fuel that runs the container ships and big-rig trucks needed to move Chinese products to domestic markets.
So, without oil, banks would have little money to lend, traders would find few stocks and commodities to trade and there never would have been enough credit flying around in the 1990s and early 2000s to enable financial weapons of mass destruction like sub-prime mortgages and credit-default swaps.
Our whole out-of-control money, banking and financial system are marinated in oil. This means that if Wall Street is like an office coke dealer, then Big Oil is like the kingpin of the Medellin Cartel.
Starve the beast
Silly chain emails calling on drivers to boycott one brand of gas station, say BP, in order to bring down the price at every retailer’s pump, just distract from the real problem with oil. Even if it made any difference (which it won’t), whining for cheap fuel is degrading and disempowering, keeping us just where the oil companies want us, hooked to their product.
Instead, people empowered by the open-air education in active citizenship that we’re all getting from the Occupy movement need to focus on things that we can do individually and together to reduce the economy’s reliance on oil while fighting against the corrupting influence of Big Oil in politics. Here are the top five:
1. Get oil money out of politics.
Oil and gas companies have donated $238.7 million to candidates and parties since the 1990 election cycle, 75 percent of which has gone to Republicans, who have worked shamelessly to protect industry subsidies and fight restrictions on drilling. But to get oil money out of politics, we’ll have to attack the issue of corporate politicking in general.
The Founding Fathers saw corporate power as a threat to their new democracy. “Let monopolies and all kinds and degrees of oppression be carefully guarded against,” said Samuel Webster in 1777. Madison and Jefferson feared a pseudo-aristocracy of corporations and echoed the sentiment that large corporations needed to be subordinate to ordinary citizens. Only in the age of the Robber Barons did it become legal and acceptable for large companies to support political candidates and lobby politicians. At the same time, the Supreme Court laid the framework for “corporate personhood,” a mistake which the court solidified in 2010 with the infamous Citizens United case that lifted nearly all restrictions on corporate political giving.
The solution? Pass a constitutional amendment declaring that corporations are not people. That may not be as hard as it sounds. Most Americans, including 68% of Republicans, support an amendment to get corporate money out of politics.
2. Cut direct subsidies to oil companies.
Over the last sixty years, 70% of all government subsidies for energy have gone to fossil fuels, as opposed to just 10% to renewable energy. Oil and gas companies alone have received a whopping 58% of all subsidies, and they continue to receive this corporate welfare despite reporting record profits. In an economy where market demand is clearly sufficient to ensure that companies make money — and lots of it — from pumping gas and oil, only the massive political influence of the industry has been able to maintain obviously unnecessary taxpayer handouts.
Once we can curb the power of corporate money in politics and make Congress and the White House more accountable to citizens than to corporations, we need to repeal all direct subsidies to fabulously profitable companies from ExxonMobil to Chesapeake Energy.
3. Cut indirect subsidies for oil through the ARSE (auto/road/sprawl) Complex.
While subsidies given directly to the oil industry get the most attention in the media, it’s really the subsidies that they receive indirectly in many different ways that artificially inflate oil company profits. And these dwarf direct subsidies, as David Roberts writes at Grist.
Indirect handouts to oil include $3 trillion for the wars in Afghanistan and Iraq along with billions more in ongoing costs each year to protect shipping lanes for oil tankers from the Strait of Hormuz to the Niger Delta. Then, add in costs to human health from air pollution and climate change, which may be hard to tally, but are easy to recognize. As Bill McKibben has put it, making the connection between oil and finance, “Wall Street has been occupying the atmosphere.” Finally, billions more spent on a transportation infrastructure of roads for personal cars will turn out to be money wasted when America finally makes the inevitable transition away from oil-based transportation.
Starting as soon as possible, the US should put a moratorium on new road construction, as groups in the UK are pushing for. Then, would it be too radical to quickly ban the sale of any new gasoline cars, as Norway has proposed doing in 2015? After that, it will be much easier to start a crash program of repairing our passenger train system while promoting transportation that doesn’t require oil like bicycling and walking (see below for more on that).
4. Remove barriers to renewable energy.
If the US is to retain any semblance of an industrial economy and be able to provide the jobs that the Occupiers want in a future beyond oil, then we’ll need to trade in today’s inefficient personal cars, trucks and planes for electric trains powered by clean, safe energy sources like solar and wind.
Fifty years ago, auto and rubber companies dismantled the best rail system in the world to create a bigger market for cars and tires in the US. Now, auto and oil companies continue to use their influence over government to cripple public transit and prevent the US from building a modern rail system. Likewise, Big Oil is trying to strangle clean energy in its cradle by killing the public support that helped all energy sources to grow in the past (Solyndra “scandal,” anyone?).
Even worse, dirty energy interests, including oil and gas companies, have helped turn government into an obstacle to clean power through monopoly electric utilities on the state level. To generate power, electric utilities favor natural gas, along with coal and nuclear power, over solar and wind. And even if a utility has little interest in building out its own clean generation, the utility may still invoke its legal monopoly power to stop anybody else from installing solar and wind in that utility’s service area.
To break the iron grip of yesterday’s energy sources on the neck of the energy sources of tomorrow, it may take nothing less than passing a mandatory Renewable Portfolio Standard on the federal level, requiring electric utilities nationwide to offer their customers more and more clean energy over time and thus creating a growing market for solar and wind.
5. Conserve and relocalize.
While it will be necessary for the United States to build out all the clean energy we can as quickly as possible, we also need to be realistic and recognize that no amount of renewable energy sources are likely to replace the huge amount of fossil fuels that the world economy relies on today, as Richard Heinberg has demonstrated. Therefore, we’ll have no choice but to use less energy in the future. And as they say in cop movies, we can do this the easy way or we can do it the hard way.
Today, we continue to feed our addiction to oil by trying to squeeze out every last drop of tar sands or deepwater oil, no matter how dirty, dangerous or expensive. Concerns about climate aside, from the viewpoint of supply alone, that’s just kicking the can down the road. Sooner or later, continuing to feed our fossil fuel addiction will lead inevitably to an oil crash that will bring suffering a hundred times worse than the 2008 Wall Street crisis.
A better way would be to start powering down our whole economy now, while we can still do so with some control. A big piece of that will require the US and other rich countries to bring their manufacturing back home from China. We need to stop outsourcing and then we need to reverse it. On the national level, OWS can help a movement gain steam to repeal the deceptively named “free trade” and reinstate import tariffs to protect the domestic industry that’s still left and start bringing our factories back home.
Meanwhile, on the community level, the Transition movement offers an increasingly popular model for towns and cities to take more control over their economic fate and start reducing their reliance on imports from big corporations by providing more of their goods and services at home. Cutting our purchases of consumer products made 5,000 miles away is perhaps the best thing we can all to do use less oil now and in the future.
— Erik Curren, Transition Voice