The White House’s own anti-inflation staff produced additional damning evidence of oil company supply and price manipulations. Terence O’Rourke, former Texas Railroad Commission candidate and current adviser on energy to White House inflation czar Alfred Kahn, reported to Kahn on November 7 that a handful of big multinationals like Exxon had diverted foreign oil last year from U.S. customers to the spot market, where prices were highest, and at the same time “greatly expanded” their mark-ups on remaining sales to other U.S. companies. “Their customers who were cut back,” wrote O’Rourke, “were driven into very thin spot markets for oil where they bid up prices to extraordinary levels. They imported this oil at vastly inflated prices into .the United States, where it has had the double impact of driving up prices for both domestic crude oil and refined products”including, of course, the products of the industry giants that rigged the international market. White House policy-makers have ignored O’Rourke’s findings. The staff of the House commerce subcommittee on energy and power, meanwhile, has been finding out how the industry behaves once domestic prices are decontrolled. Here’s what these investigators have learned about the rapidly rising price of home heating oil, which has been decontrolled since 1976: “Contrary to their testimony before Congressional committees, the major oil companies did no marginal cost analysis as the basis for their enormous price increases over the last year. Staff interviews of top officials of some of the major oil companies have revealed that most of the companies ‘charge what the market will bear.’ ” The subcommittee staff also reported DOE’s astounding response to such runaway prices: “The DOE staff explained that the major refiners were responsible companies and would not gouge the consumertherefore, they did not attempt to verify any of the numbers used in their various heating oil margin studies.” According to an article by Fred J. Cook in the Nation, the President’s own top domestic policy adviser, Stuart Eizenstat, summed up the evidence as follows in an October 29 memo: “Increases in the price of crude oil by the OPEC nations can account for much less than one-half of the price increases so far this year in refined petroleum products.” .Big Oil has gotten away with this highway robbery, it is said, because consumers have been numbed by panic pricing and the propaganda barrage from the industry and its allies. But what’s more plausible is that most members of Congress have allowed themselves to be panicked by the combined political clout of the, industry and the White House. As Texas Business magazine noted in November, “Even polls in energy-rich Texas indicate a lack of popular support for the oil companies. On their return from the Labor Day recess, a number of Texas Congressmen reported strong support from the folks back home for a sock-itto-’em windfall profits tax and surprising sentiment for fullscale federal intervention into the energy industryeven to the extent of nationalization.” The agenda for congressional debate must be re-opened. .It should include proposals to: Put price controls on crude oil and refined products that would be simple to understand and enforce and would not discriminate irrationally among producers, nor depend on halfhearted regulators like the ones now at DOE \(prices would be based on actual production costs and could give reasonable Create a publicly-owned energy corporation to develop oil resources on federal lands or, at a minimum, reform the federal leasing program, which currently is ridiculously generous to the oil industry. Break up the majors that effectively control the market from the well to the gas pump, thus depriving them of the power to contrive shortages and fix prices. Ensure that conservation means sharing any sacrifice, not sacrifice for the consumer and plunder for the oil companies, by rationing retail gasoline if need be and certainly by subsidizing consumer purchases of energy-efficient equipment. Nationalize the oil industry, if nothing else suffices to break Big Oil’s strangle hold on the nation’s energy supplies. The U.S. and other countries in the capitalist West have taken such measures at different times in different industries without having their economies go to hell. As the Englishman EdwirrChadwick observed during a debate over the nationalization of Britain’s railroads in 1866, “the fact of a thing being done is cogent evidence of its possibility.” And if the President and members of Congress won’t heed the reports of oil company avarice and refuse to consider the practical alternatives to decontrol, consumers ought to present them with cogent evidence of the possibility that they won’t be re-elected. E.H. THE TEXAS OBSERVER 3
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The Texas Rangers are tasked with investigating corruption and crimes by public officials. Those officials are rarely held accountable.