Biden did not fight against big oil. Democrats will pay for it – Rolling Stone
The war is about power, but it’s also about money. For Big Oil, Russian President Vladimir Putin’s invasion of Ukraine was a dream come true, disrupting oil markets and sending prices soaring. And they reaped the rewards. Exxon’s profit in the third quarter of this year was $18.7 billion – almost triple what Exxon earned last year and the most in the company’s 152-year history. Over the past six months, the six largest oil companies have earned more than $100 billion.
On Monday, President Biden accused Big Oil of profiting from the blood and suffering of the Ukrainian people. “Today’s record oil company profits are not the result of anything new or innovative,” Biden said. “Their profits are a windfall of war, a windfall for a brutal conflict that is ravaging Ukraine and hurting tens of millions of people around the world.”
The president urged Big Oil executives to increase production and lower prices. “If they don’t, they will pay higher taxes on their excess profits and face other restrictions,” Biden warned.
It was a nice bit of old economic populism, something Democrats desperately need in the final days of the midterm elections. But it was also a perfectly illustrated electoral oil trap that has long crippled American politics.
The trap works something like this: For most Americans, the clearest indicator of inflation is the price of gas. So, in order to keep the price of gas low, the basic law of supply and demand requires that there be plenty of oil. This means boosting oil production. In the 1970s, that meant dealing with OPEC and the effort by Arab producers to control the oil supply. But in today’s world, it’s more complicated, since a larger percentage of our oil now comes from domestic sources, so increasing production means opening up more areas (onshore and off-shore) for exploration and drilling. It is also more complicated because it is very clear that burning oil destroys the climate. And if we take it seriously, we must radically accelerate the transition to clean energy and stop burning fossil fuels now.
Or, to put it more bluntly, you can’t have low oil prices and a stable climate. Which is more important? It’s not just about the economy versus the environment. It’s about your own well-being versus the well-being of others. It’s about the value of the present versus the value of the future.
With passing Inflation Reduction Actwhich directs $369 billion into clean energy and climate change Programs over the next decade, Biden and the Democrats have arguably done more to address the climate crisis than any other administration in American history. But when it came to taking on Big Oil, Biden was less certain. “When gas prices first started to rise, the White House confused the issue by trying to label it as ‘Putin’s price hike,’ diverting attention from big oil,” wrote Jamie Henn, director of Fossil Free Media and an early proponent of the windfall tax. “Then they tried to project an image of ‘working with’ the industry, meeting with oil executives and sending President Biden to fist bump the Saudi crown prince.” When prices temporarily dropped this summer, the administration was quick to accept the problem — without thinking about how, when prices rise again, as they are now, they too will admit it.”
In fact, Biden has tried to do it both ways: fighting hard for clean energy and climate action while also fighting hard to keep oil prices low and not anger voters who see cheap, abundant gas as a God-given right. Americans. Biden has tried to balance these two conflicting demands, but it’s a difficult tightrope to walk.
For Big Oil, this is also a complex moment. Instead of investing more in research and production, as they did in other boom times, they keep billions in their pockets. Why? The simplest explanation is greed: they take money because capitalists do. Beyond that, however, many oil executives fear a recession is on the horizon, which could reduce demand for oil, end the boom and send the industry into another bust (the oil and gas industry has been through many of these). But there are also long-term concerns about future oil demand and whether new investments today will become stranded assets in ten years. How soon will the rise of electric cars threaten oil demand? How soon will the adaptation of heat pumps kill the need for gas in people’s homes? The World Energy Outlook 2022, the International Energy Agency’s respected 532-page report, found that Putin’s war has “turbo-charged” the move away from fossil fuels. The report predicts that global fossil fuel consumption will peak in the next five years.
But curtailing production, oil executives have discovered, has its virtues. Like more market control, for example. “Today, shareholder pressure to remain frugal is so strong and uniform across the industry that it looks almost like a cartel from the outside,” Bloomberg columnist Javier Blas wrote. And cartels, as any drug dealer knows, can set whatever price they want for their drugs (or oil). There is no need to even pretend that they are capitalists operating in an open and fair market.
The oil cartel is nothing new. One hundred years ago, President Teddy Roosevelt had to go to the Supreme Court to break up Rockefeller’s oil empire. But then it was only about money.
Today, there is much more at stake. And it is not only the moral obscenity of profiting from death and suffering in Ukraine. It is also the moral obscenity of profiting from destroying the climate and pushing life on Earth towards the sixth extinction while oil executives and shareholders fund their dividends and pour black money into outside groups that shape elections. For now, almost A billion dollars was spent by these groups in 2022 to boost GOP Senate candidates in the midterm elections.
What can be done about it? An oil tax, which is being pushed hard by Sen. Sheldon Whitehouse (D-R.I.) and other climate-savvy Democrats, has plenty of populist appeal. It would apply a 50 percent tax on the excess profits currently made by the industry. The revenue raised — which could total more than $40 billion a year — would then be used to send a check to Americans who need help with high gas prices and energy bills. Taxpayers below the $70,000 annual income threshold can expect to receive about $240 based on current prices. This bill could gain momentum if Democrats manage to hold onto the House and Senate, but Republicans will squish it like a bug against the windshield of an 18-wheeler if they take control of either house of Congress after the election.
In fact, if the Republicans win anything, you can expect a complete restoration of Big Oil to the throne, as well as legislation that redirects the flow of public and private money to anyone and anything that can slow, stop, or redirect the transition to clean energy. Like the MAGA crowd, Big Oil thrives on lies, chaos, disorder and disruption. So expect a lot. For Trumpers, burning fossil fuels is how you make America great again. They will defend the pipelines with guns and sweet talk Putin and melt every glacier in Greenland if it means cheaper gas.
After all, the only way out of the oil trap is to get rid of fossil fuels altogether. And the faster the better. Because as I fear we will soon discover, our dependence on fossil fuels may eventually cost us the habitable planet, but first it may cost us our democracy.
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