Does Big Oil Still Call the Shots?

by lizard

Forbes has a cute title for an article about the 400 billion dollar gas deal between Russia and China: A Game of Spigots? The article describes the deal as an opportunity for both respective leaders to strengthen ailing national oil companies:

Russia to China gas deal is more than just a story of global markets and geopolitics (see my colleague Ken Medlock’s piece on the deal’s impact on global and Asian gas markets, and Jim Krane’s piece on global geopolitical implications of the negotiations). The gas pipeline between China and Russia also represents concrete personal achievements that Vladimir Putin and Xi Jinping can point to in defending their authoritarian policies against criticism from home and abroad. Meanwhile, behind the scenes, the gas deal is a game of spigots: a well-timed effort by both Russia and China to simultaneously inject resources in to ailing national oil and gas companies (NOCs) in exchange for new political control over these flagship state enterprises.

The idea of national oil companies might sound crazy to rabid Capitalists, but when you look at the lovely set-up Big Oil has in the states, the craziness is how American taxpayers subsidize the most profitable industry in the world:

US oil companies earn about $3 billion in profits every week, yet get $4 billion in taxpayer subsidies every year. In the first quarter of 2011, Big Oil’s profits were up 38% from the first quarter of 2010.

The industry’s outsize profits didn’t stop it from squealing like a stuck pig over proposals to trim $2 billion from its annual subsidies and use the revenue to reduce the deficit by about $21 billion over 10 years.

The oil companies tried to characterize the end of their subsidies as a “tax hike,” despite growing and widespread recognition across the political spectrum that tax breaks are just another form of government spending, one of several ways to provide direct support for an industry. Before becoming Speaker, John Boehner (R-Ohio) admitted that “tax deductions, credits, and special carve-outs . . . what Washington sometimes calls tax cuts are really just poorly disguised spending programs ….”

Subsidizing the oil industry is bad enough. Sending soldiers to Iraq to kill and die for the oil industry is beyond obscene. Here’s Mike Whitney’s latest, titled Iraq: the Biggest Petroleum Heist in History? Here’s an excerpt:

Dr Abdulhay Yahya Zalloum, an international oil consultant and economist …(said) he believes western oil companies have successfully acquired the lions’ share of Iraq’s oil, “but they gave a little piece of the cake for China and some of the other countries and companies to keep them silent”. (Aljazeera)

How do you like that? These guys operate just like the Mafia. The Bossman pays off China with a few million barrels, and China keeps its mouth shut. Nice. Everyone gets “their cut” so they don’t go blabbing to the media about the ripoff that’s taking place in broad daylight. The stench of corruption is overpowering.

And here’s something else you won’t see in the media. In a White House press release, the Obama administration announced that they would continue to support Iraq’s “efforts to develop the energy sector” in order to “help boost Iraq’s oil production.”….

According to Assim Jihad, spokesman for Iraq’s ministry of oil, “Iraq has a goal of raising its oil production capacity to 12m bpd by 2017, which would place it in the top echelon of global producers.” (Aljazeera)

“12 million barrels-per-day by 2017″?

That makes this the biggest petroleum heist in history. And we’re supposed to believe that the oil bigwigs didn’t know anything about this before the war? What a crock! I’ll bet you even money the CEOs and their lackeys figured out that Saudi Arabia was running out of gas, so they decided to pick up stakes and move their operations to good old Mesopotamia. That’s why they put their money on Bush and Cheney, because they knew that two former oil men would do the heavy lifting once they got shoehorned into the White House. The whole thing was a set-up from the get-go, right down to the 5 shady Supremes who suspended the voting in Florida and crowned Bush emperor in 2000. The whole thing was probably mapped out years in advance.

Big oil runs everything in America. People talk about the power of Wall Street and Israel, but oil is still king. They run it all, and they own it all. And “what they say, goes.”

Too simplistic? Maybe. But it’s hard to overstate the influence of Big Oil.

  1. Well, let’s get rid of those oil and gas tax holidays and shovel that money into the social programs which Republican-controlled legislatures across the nation refuse to fund.

  2. mike

    That you take a site like counterpunch seriously one can only say progderp.

    Progs bitch about oil profits with profit margins of 10 per cent due to the high cost of obtaining new resources to keep mine and your vehicle on the road yet adore Apple with profit margins of 40 per cent. Why is a smaller profit margin evil and Apple with fat margins not evil.

    Why aren’t you guys against Apple’s evil profit margins?

    Hey Greg, Boeing and Apple get more tax breaks than oil companies, check out the export/import bank.

    Hey Greg, the SNAP (food stamp) budget went up 65% for the next ten years in the farm bill, far above inflation.

    I’m a libertarian Greg, because team Red wants to curtail freedom on social matters so they don’t represent me (and they also like to spend money they don’t have).

    So Greg defend that statist failures like the VA system which is beyond repair, Amtrak, the USPS that team blue tout. They cost billions that taxpayers eat every year.

    I actually like some of your comments on local issues Greg, but on national issues you are clueless. Stick to local issues, you can do well there,

    • JC

      Mike, while I’m not trying to defend greg here, you need to get your facts straight before you go spouting off on all your libertarian conclusions. Conclusions based on the wrong facts is called ignorance.

      Apple’s average net profit lately is around 22%.

      Exxon’s net reported profit is a little less than 10%, some oil companies more, some less.

      But the U.S. taxpayer doesn’t subsidize Apple like they do the oil industry. Estimated oil industry subsidies range from $10 billion to $50 billion per year (if you factor in having the u.S. military propping up the industry. You can quibble about the sources for the amount of the subsidy — here’s another — but no intelligent person would deny that they exist and that they need to be factored into the debate.

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