As energy prices soar and the middle-class continues to shrink, Exxon Mobil has made more profits in the past two years than any other corporation in the history of the world. Last year alone, Exxon Mobil made $40 billion in profits, and rewarded its CEO Rex Tillerson with $21 million in total compensation. (Several years ago they provided their outgoing CEO Lee Raymond with a $400 million retirement package). Chevron, ConocoPhillips, Shell and BP also have posted record profits. In fact, the five largest oil companies in this country have made $595 billion in profits since George W. Bush has been president.
Sadly, as in so many other areas regarding the needs of ordinary Americans, the Bush-Cheney administration has had nothing relevant to say. In their previous lives, both Bush and Cheney were heavily involved in the oil industry. They are far more concerned about the needs of oil company executives than working families.
So with deafening silence from the White House, Congress must act and act now.
There is no single silver bullet that will lower oil prices. The solution rests with action on a number of fronts - both long term and short term.
Long term, we must significantly increase our efforts at breaking our dependency on foreign oil and fossil fuels in general and move toward energy efficiency and such sustainable energies as solar, wind, geo-thermal and bio-mass. In the process, we can create millions of good paying jobs as we reverse global warming, clean up our environment and lower energy costs.
Short term, in order to address the immediate crisis, we need to:
- Impose an excise tax on oil companies. The $35 billion in new revenue would fund a six-month federal and state "gas tax holiday." This approach would lower the price of gas by up to 36 cents a gallon without reducing the Highway Trust Fund at a time when repairs to our decaying roads and bridges are desperately needed.
- End the "Enron Loophole." Created in 2000, this loophole exempts electronic energy trading from federal commodities laws. Virtually overnight, it freed over-the-counter energy trading from meaningful oversight, opening the door to excessive speculation and energy price manipulation. We also must regulate the secretive hedge fund industry which has also driven up the price of oil. Some experts believe a "speculation premium" is driving up oil prices by as much as 50 percent.
- Demand that Saudi Arabia and other OPEC oil-producing countries increase their production and put more oil on the market. Incredibly, Saudi Arabia is producing less oil today than it did two years ago. Experts believe that Saudi Arabia alone has the capability to increase oil production by 1.8 million barrels a day. The U.S. also should work to end the OPEC cartel which, in my view, functions in violation of international trade rules by illegally colluding to limit oil production and drive up prices. The exploding price of oil is expected to increase OPEC's crude oil export earnings by $300 billion this year to a record $980 billion.
- Stop the flow of oil into the Strategic Petroleum Reserve and immediately release oil from this federal stockpile. With the Reserve at 97 percent of capacity, the release of oil into the market will send a strong signal to the industry that the U.S. government is serious about lowering oil and gas prices. This strategy pushed down oil prices during the administrations of George H.W. Bush and Bill Clinton. Goldman Sachs has estimated that continuing to fill the Strategic Petroleum Reserve has increased gas prices at the pump by as much as 25 cents a gallon.
Let me be clear. Despite support from many members of Congress, it is not going to be easy to pass any of these initiatives to lower gas prices. Since 1998, the oil and gas industry has spent $616 million lobbying Congress. Since 1990, they have made more than $213 million in campaign contributions. Big Oil, hedge funds and the financial services industry also have enormous power in Washington, not to mention a very good friend in the White House.
Nonetheless, if there was ever a moment in time for Congress to stand up to the greed of Big Oil and powerful financial institutions, this is it. The American people are hurting and they're asking for help. Let's respond and lower the price of oil and gas.
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