Oil price surges are crushing consumers and the auto industry. There are two solutions that would make a significant difference: a windfall profits tax on the oil industry and enforcement of the Antitrust Act. President George W. Bush mentioned neither in his State of the Union address.
Reports just out show that ExxonMobil achieved the highest quarterly profits ever for any publicly traded company, $10.7 billion. Last fall, the nation hollered for about a day after learning oil companies as a whole reported the biggest quarterly profits of any American industry in history: $100 billion. Clearly, the earlier spin of the oil companies, blaming high prices on OPEC's charge per barrel, Hurricane Katrina and Middle East supplies were false.
Oil companies, on average, raised gasoline prices 24 cents a gallon in the 24 hours after Katrina. Prices reached more than $3 a gallon, exploiting fear but for no empirical reason. It was greed exploiting a disaster. Then, under public and media pressure, prices dropped. U.S. Sens. Christopher Dodd, D-Conn., and Byron Dorgan, D-N.D., have introduced legislation, S.1631, supported by U.S. Rep. Sander Levin, D-Royal Oak, to mandate a 50% tax on sales of prices above $40 per barrel. All investments in oil exploration, refineries or capacity expansion would be exempt. The bill would expand U.S. oil resources and reduce the deficit.
The White House has promised the president will veto an energy bill with a windfall profits tax. However, gas prices are now up 20 cents since the middle of December, and the national average for regular is currently $2.39 a gallon -- 30% higher than a year ago. Yet the Department of Energy says domestic supplies of gasoline have grown by 4.5 million barrels since Jan.1, and economic models say more supply means lower cost -- which has not occurred.
After the Katrina spike, U.S. Sen. Hillary Clinton, D-N.Y., joined by Gov. Jennifer Granholm and the governors of Oregon, Wisconsin, Illinois, New Mexico, Iowa, Montana and Washington, asked the president, Congress and the Federal Trade Commission to investigate oil company price tactics.
Why do companies that generate record profits receive $7.2 billion in government subsidies? Just why was U.S. Rep. Tom DeLay, R-Texas, allowed when he was majority leader to hold open a five-minute floor vote in the House for 48 minutes until an additional $2.6-billion oil company tax break was approved by a 212-210 count?
The Antitrust Act was supposed to stop big monopolies from being created, to break up existing ones, and to ensure that a few companies would not control prices. Listen to the names -- Exxon ... and Mobil. How much bigger could each be, and then allow their merger? Is there any longer a point to the Antitrust Act? This bill needs to be applied to the current state of the American oil industry. In addition to stopping mergers of giants, Congress at the least must stop whatever discussions oil officials have that generate instant identical predatory pricing. Big oil knows how to maneuver prices to capitalize on the relatively stable U.S. economy. After booming to a Dow Jones record of 11,727.98 on Jan. 14, 2000, the stock market has stagnated at lower indicators for the last five years. The slow national job growth rate -- a net of 2 million new jobs in five years -- when counting the 2 million lost in 2001-02, which President Bush no longer mentions -- compares to 23 million new jobs in the previous eight years. Oil price gouging is slowing American growth.
The government has the power to create a more competitive market with lower prices. It is absurd to subsidize the oil/gas industry. It's consumers who need help.
ROBERT WEINER was spokesman for the U.S. House Government Operations Committee under Chairman John Conyers, D-Detroit, and a senior public affairs director in the Clinton White House.
CAEL PULITZER, a graduate of Wake Forest University in political science, is senior policy analyst at Robert Weiner Associates, www.weinerpublic.com.