Political Promises to Lower Gas Prices Running on Empty

Brandon Turbeville
Activist Post
March 1, 2012

As the election circus continues to crisscross the country, Presidential candidates are now engaging in yet another round of false promises and ridiculous claims in an effort to galvanize their support and further divide the country now along the lines of absurd guarantees of cheaper gasoline prices.

Newt Gingrich has been the most vocal of the Republican candidates in his attacks on Barack Obama with his claims that, if Gingrich is elected, he will lower the gas prices to an average of $2.50 per gallon. Of course, Gingrich is merely following the lead of Mitt Romney who has also attacked Obama for the high prices at the pump with almost identical solutions although, admittedly, not as dramatic as Gingrich in terms of presentation.

Obama has dismissed the criticism as campaign rhetoric and has remained relatively mute about the price of gasoline. After all, there is little he can say since gas prices have more than doubled from when he took office. An argument suggesting relief for the consumer is not a wise shot to be fired from the Obama camp.

Yet, are the solutions being offered by Gingrich, Romney, and other establishment Republicans/Conservatives such as opening the Arctic National Wildlife Refuge (ANWR) to oil drilling, increasing offshore oil rigs, and further development of federal lands and protected areas really something that will lower the price of gasoline? The answer, simply put, is no.  Supply and demand play little to no role in the price of oil these days.


The argument being made by Gingrich, Romney, and the rest of their ilk is that opening cherished national wildlife refuges and national parks, as well as offshore drilling sites, to international oil corporations will not only reduce the price of gasoline but also reduce the dependence of the United States upon foreign oil. The implication is that opening up these areas to increased drilling will increase the amount of oil in circulation within the United States, thus driving prices down.

Unbeknownst to most Americans, however, this is not the case.

The fact is that the United States actually exports a large amount of its domestically produced oil to other countries. Ironically, it is one of the few things that the United States is actually an exporter of considering how almost every other domestic industry has been shipped overseas by design.

Indeed, according to USA TODAY, the U.S. exported so much oil in the first nine months of 2011 that it might be the first year since 1949 that the U.S. is a net exporter of oil and oil-based goods. Not only that, but the United States has been increasing its crude oil production every year since 2008.  Meanwhile the stagnant global economy has experienced a reduction in oil demand since oil's previous peak in 2008.

Nevertheless, oil produced and drilled inside the United States is not required to stay inside the United States. It can go wherever the producer can achieve the highest price. Therefore, increasing the amount of oil produced inside the United States would not likely change the forces of the market. Therefore, to suggest that the increase in production would result in greater energy independence for the United States is simply untrue.

For instance, toward the end of 2008, when the Bush administration was pushing for more offshore drilling, climate change alarmist Rep. Edward J. Markey of Massachussetts wrote a public letter to Bush where he stated “. . .  at the current export rate, by the time the first barrel of oil could be produced from offshore drilling, America would have already exported the equivalent of nearly 40 percent of the oil that is projected to lie beneath protected areas offshore.”[1]

The goal of Markey’s letter was to promote the idea of keeping “our oil at home.” Unfortunately, the letter gave no indication as to how this would be done. However, the letter does demonstrate the fact that American oil exports vs. energy independence are a very real and important dilemma. Not only that, but it shows that simply increasing the amount of domestic oil in the market will do nothing for energy independence.

But what of the issue of oil/gas prices?

Here, as in the case of national energy independence, one must ask what evidence we have been given to show us that the increased availability of oil will lower the price of oil and gas at the pump. The fact is, we have been given no evidence that this will be the case. Indeed, the evidence that we do have shows that results will be quite the opposite.

Case in point: Since 2009, gas prices have more than doubled, yet U.S. domestic oil production has steadily risen. In fact, Obama himself has followed along with the plan touted by reactionaries like Gingrich and Romney when he opened vast swaths of American coastline to oil companies for offshore drilling in 2010. If Gingrich’s solutions are legitimate, then Americans should have been seeing their prices decrease over the last three years. They haven’t.

This is because of the radical idea that oil companies are not necessarily concerned with the national interest nor are they concerned with the pain felt at the pump by the average consumer. Major international oil companies are actually nothing more than an international cartel bent on making astronomical profits for themselves regardless of the consequences to the consumer.

Although gas prices will no doubt occasionally go down from time to time, the trend unquestionably moves upward. When there is downward trend in demand (i.e. the economy is in the tank and no one can afford gas), prices still miraculously go up due to “lack of demand.” When there is an increase in demand, prices still go up because a “lack of capacity,” “scarcity,” or some other market-centered or manufactured excuse. Regardless of the situation, the prices inevitably move up. This is the hallmark of a cartel.

Indeed, Sara Banaszak of the American Petroleum Institute confirmed this fact when she stated to the Washington Post, “I wouldn’t say you would expect inventories to dictate the direction of prices.” By this, she means that higher oil inventories do not equal lower prices. This much is true.

One need only look to Canada to see this play out. For instance, Canada produces over one million barrels more than they consume daily and have almost ten times the amount of proven oil reserves than does the United States. Regardless, gas price spikes occur Canada almost identically to those in the United States because of global cartel price setting.

Indeed, it is also important for Americans to understand that what they consider to be “their” oil companies are anything but. Oil is an international business and the major corporations who deal in this business are likewise international. Borders are essentially meaningless to them. In short, major oil companies do not have the national interest at heart.

Remember, the major oil companies such as EXXON MOBIL, CHEVRON, and AMOCO (now owned by BP) as well as others were once Standard Oil, owned by the infamous Rockefeller family which is still a large owner by virtue of holdings in major international banks.

These companies colluded openly with I.G. Farben of Nazi Germany fame and helped make the Third Reich possible. Although many years ago, this only goes to show how much national loyalty these international companies hold. Considering the views that the Rockefeller’s have held regarding national sovereignty, it would not be wise to assume that they hold energy independence in high regard.  To be sure, a nation that is able to stand on its own two feet and resist globalism would not be in the best interest of the globalists.

Indeed, considering the views of the Rockefeller family and the CEO’s of these companies as well as the basic nature of business, one would also find it unwise to assume that their goal is to provide cheap energy to the American people.

The fact that more oil does not equal lower prices is relatively well established by our current experience. But what are the causes of rising gas prices? Obviously, the traditional laws of supply and demand still play a small role. However, as has already been demonstrated, the oil industry has been so dominated by the international cartel network of corporations and banking institutions that prices now rise regardless of the level of supply or demand.

Greed, of course, is another major issue and one that has been the focus of much resentment toward the industry. While Americans have suffered under record gas prices this year, the five major oil companies – EXXON MOBIL, Royal Dutch Shell, ConocoPhillips, Chevron, and BP – all raked in massive fourth quarter profits of $137 billion. The oil companies enjoyed these profits while retaining a cash reserve of approximately $58 billion and; and on top of that, they receive large subsidies and tax breaks from the U.S. government.

Dollar devaluation also plays a role in the rising price of gasoline as oil is denominated in U.S. dollars. A recent Forbes Magazine report entitled, Gasoline Prices Are Not Rising, The Dollar Is Falling, explored this issue somewhat.  It presents the drastic decline of U.S. purchasing power as essentially the only (or at least the main) cause of rising gas prices. Simon Black& recently showed how the price of gas is actually in a deflationary spiral if it was purchased in gold. And yesterday, Ron Paul confronted Bernanke about the issue of devalued Federal Reserve Notes in regards to gas higher prices by telling Bernanke when he took over at the Fed in 2006, an ounce of silver bought about 4 gallons of gas, where as today it will buy nearly three times that amount.

While the loss of the dollar’s value is a major factor, it is by no means the only one.

Speculation, however, seems to be one of the most important factors regarding the price of oil and gas worldwide. In this regard, one can even see the hand of the usual suspects who have made a living for generations on the back of the “small people.”

Indeed, in a report that came out about this time last year, Goldman Sachs, an infamous institution of speculation, freely admitted that speculators like themselves are responsible for a $27 a barrel hike in the price of crude oil. The speculation trade, according to Goldman Sachs, has been known to provide investors with returns of up to 25% of their investment in four months.

Alain Sherter of CBS News wrote shortly after the initial report and admission by Goldman Sachs,

How much does speculation drive up oil prices? By roughly 20 percent, or between $21.40 and $26.75 a barrel, Goldman suggested. Every million barrels of oil held by speculators results in a price of 8-10 percent. Not surprisingly, such increases coincide with record levels of oil futures, Commodity Futures Trading Commission officials note. Since June 2008, the number of energy contracts held by such investors has risen 64 percent.

Likewise, as Webster Griffin Tarpley wrote in his seminal work “Surviving the Cataclysm,”

Banks like JP Morgan Chase, Citibank, and the Bank of America long ago gave up providing commercial bank services in the form of loans to companies seeking to purchase new plant and equipment for new capital investment and job creation. The banks do not discount commercial paper anymore. They deal in derivatives and speculation, and little else. A year ago, JP Morgan Chase had $93 TRILLION in derivatives of certain types – more than six times the total Gross Domestic Product of the United States, and this is a very low-ball estimate indeed. When they were still investment banks, Goldman Sachs and Morgan Stanley created the Intercontinental Exchange (ICE) in London to facilitate their oil futures speculation; there are indications that Goldman and Morgan between them accounted for almost half of the run-up of the world oil price, meaning in effect that these two criminal organizations were responsible for almost 25% of the total price of oil. This means that about a quarter out of every dollar paid at the gas pump by commuters, cab drivers, and truckers was going to subsidize Goldman Sachs and Morgan Stanley.[2]

The idea that simply opening up new wells, particularly those of protected wildlife refuges like ANWR, will relieve the pressure felt at the pump by the average American is simply not grounded in reality.

In light of the repeated and colossal damaged done to the environment as a result of major oil companies in regards to their negligent and sometimes intentionally destructive behavior, it would be foolhardy to assume that the future will bring no more Deepwater Horizon Oil Spills or EXXON Valdez incidents. Indeed, it would be unwise to assume that any of the oil giants would concern themselves with anything other than a dollar sign and the increase in the amount of control they (and their banker owners) wield over world society.

Gas prices are no doubt crippling the American economy. But to allow our legitimately protected wildlife refuges and national parks to be raped by oil companies who will neither lower the price nor keep the oil they extract within our borders should not be an option.

This is not a call to end drilling. At this point, we couldn’t even do that if we wanted to. It is, however, a call to be smarter about the way we treat our environment and how we approach vital economic issues. In my experience, giving carte blanche to major corporations and banks has never been beneficial to national interest.

[1] Sassoon, David. “US Oil Exports Hit Record Pace. That’s Right, Exports.” Huffington Post.
[2] Tarpley, Webster Griffin. “Surviving The Cataclysm.” Progressive Press. 3^rd Edition. 2011. P.83.

Read other articles by Brandon Turbeville here. 

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