MBS

“Unconscionably excessive” prices for oil? Hell, yeah!

~ Michael Stevenson ~ Leave a comment

Heather Cox Richardson | Letters from an American

HCR
Heather Cox Richardson

June 14, 2022

Today the White House announced that President Joe Biden will visit the Middle East next month. His first stop will be in Israel, and then he will go to Saudi Arabia, where he will meet with Crown Prince Mohammed bin Salman (MBS), the man responsible for the murder and dismemberment of Washington Post journalist Jamal Khashoggi. MBS recently invested $2 billion in Jared Kushner’s new investment fund against the advice of the funds’ advisors.

In 2019, Biden promised to make Saudi Arabia a “pariah” in part because of the Khashoggi killing, but administration officials have been quietly visiting for months, in part to urge Saudi Arabia to increase oil production to help ease gas prices in the U.S. While the White House maintains that it is looking for a “reset” with the Saudis in order to promote peace talks between Israel and Palestine, end the war in Yemen, and address human rights violations, it acknowledges that oil production is on the table. 

Inflation is high in the U.S., as it is all over the world, because of demand, supply chain problems, the soaring costs of transportation as the world’s few carriers jack up prices, and so on. But that inflation is driven in large part by higher oil prices, which have driven up the price of gasoline and diesel in the U.S., which in turn makes everything more expensive. 

Since the first public hearing of the House Select Committee to Investigate the January 6th Attack on the U.S. Capitol last week, much of the traffic on right-wing social media has been about gas prices, blaming them on President Biden. Republicans see gas prices and inflation as key issues both to distract from the hearings and to enable Republicans to take over control of Congress in the November midterm elections. 

In fact, according to a piece by E. Rosalie in the newsletter Hoaxlines, U.S. production of crude oil during Biden’s first year was actually higher than it was in Trump’s first year. To encourage production, Biden’s officials have issued more permits on federal lands than were issued in the Trump administration’s first three years, at a pace that approaches that of George W. Bush’s administration. Only 10% of all U.S. drilling takes place on federal land, but the Bureau of Land Management confirms that more than 9000 drilling permits on public land are currently approved. Not all would be productive if they were developed, and none of them could start producing immediately, but this undercuts the argument that gas prices are high because the Biden administration has choked off permits.  

Russia’s war on Ukraine has also driven up global oil prices, but the U.S. gets less than 2% of its oil from Russia. 

What appears to be driving U.S. gas prices is the pressure investors are putting on oil companies, whose officers answer to their investors. Limited production creates higher prices that are driving record profits. In a March 2022 survey of 141 U.S. oil producers asking them why they were holding back production, 59% said they were under investor pressure. Only 6% blamed “government regulations” for their lack of increased production. 

Oil companies are seeing huge profits and are using the money for stock buybacks to raise stock prices. BP, Shell, ExxonMobil, Chevron, TotalEnergies, Eni, and Equinor will give between $38 and $41 billion to shareholders through buyback programs this year. As EOG Resources wrote to its shareholders: “2021 was a record-setting year for EOG. We earned record net income of $4.7 billion, generated a record $5.5 billion of free cash flow, which funded record cash return of $2.7 billion to shareholders. We doubled our regular dividend rate and paid two special dividends, paying out about 30% of cash from operations…. This period of high oil prices allows us to further bolster the balance sheet. To support our renewed $5 billion buyback authorization and prepare to take advantage of other countercyclical opportunities, we plan to build and carry a higher cash balance going forward….”

But congressional Republicans appear uninterested in adjusting the disjunction between supply and demand that is creating such high consumer prices. In May the House passed the Consumer Fuel Price Gouging Prevention Act by a vote of 217 to 207 with only Democrats in the yes column and all Republicans and four Democrats voting no. The bill provided a vague warning that it is unlawful to charge “unconscionably excessive” prices for consumer fuel during presidentially declared energy emergencies, and it gave the Federal Trade Commission more power to punish price gouging. 

The Senate has not moved forward with the bill. Republicans there can kill it with the filibuster and will do so, despite the fact that a Morning Consult/Politico poll shows that 77% of registered voters—including 76% of Republicans—like such a measure. Only 13% of voters outright oppose such a law (10% have no opinion). 

Biden has sought to address the issue with the tools at his command. After trying to ease pressure by releasing oil from the strategic reserve, he has set out to reduce the nation’s demand for oil products by identifying the conversion to clean energy as a national security issue. On June 6 he vowed to “continue…pushing Congress to pass clean energy investments and tax cuts” but also authorized the use of the Defense Production Act to speed up the domestic production of solar panel parts, building insulation, heat pumps, and power grid infrastructure like transformers. He will also lower tariffs on solar technology coming to the U.S. from Southeast Asia for two years. These measures should ensure a reliable supply of solar panels while creating more jobs in the green energy sector, which currently employs more than 230,000 people in the solar industry alone.  

In addition to Biden’s measures to ease oil prices, lawmakers are trying to curb inflation by imposing the sorts of limits on carrier prices that they refuse to on oil prices. 

On Monday the House passed the Ocean Shipping Reform Act of 2022 to hamper unfair business practices among shipping carriers. The measure passed the Senate in March. Although the bills were introduced by Democrats, the votes that passed them were bipartisan, reflecting, perhaps, that the nine shipping companies that dominate the world market are multinational rather than domestic. According to Representative John Garamendi (D-CA), shippers have raised prices on U.S. businesses and consumers by more than 1000% on goods coming from Asia, enabling them to make $190 billion in profits last year, a sevenfold increase in one year. This bill, he said, “will help crush inflation and protect American jobs.” Biden has praised the bill and promises to sign it. 

And tomorrow the Federal Reserve is expected to announce an interest rate hike of three quarters of a percentage point, its highest since 1994, to combat inflation. Higher interest rates will make it more expensive to borrow money, which should cool down the economy, although getting inflation down to the 2% the Fed prefers will likely slow consumer spending, dampen wage increases, and slow economic growth.

And of course, next month, Biden will visit the Saudis, who can increase oil supplies quickly if they believe it is in their best interest to do so. 

And finally, a heads up: tomorrow’s hearing of the January 6 committee has been postponed. The next hearing is now scheduled for Thursday at 1:00 pm.

HCR: Why is Critical Race Theory such a flashpoint in today’s political world?

~ Michael Stevenson ~ Leave a comment

Heather Cox Richardson | Letters from an American

HCR
Heather Cox Richardson

June 12, 2021

Yesterday, David Ignatius had a piece in the Washington Post that uncovered the attempt of the Trump administration to reorder the Middle East along an axis anchored by Crown Prince Mohammed bin Salman of Saudia Arabia (more popularly known as MBS), Prime Minister Benjamin Netanyahu of Israel, and Jared Kushner of the U.S.

To make the deal, the leaders involved apparently wanted to muscle Jordan out of its role as the custodian of Muslim and Christian holy sites in Jerusalem, a role carved out in the 1994 peace treaty between Israel and Jordan that was hammered out under President Bill Clinton. The new dealmakers apparently wanted to scuttle the U.S.-backed accords and replace them with economic deals that would reorder the region.

This story has huge implications for the Middle East, for American government, for religion, for culture, and so on, but something else jumps out to me here: this story is a great illustration of the principles behind Critical Race Theory, which is currently tearing up the Fox News Channel. Together, the attempt to bypass Jordan and the obsession with Critical Race Theory seem to make a larger statement about the current sea change in the U.S. as people increasingly reject the individualist ideology of the Reagan era.

When Kushner set out to construct a Middle East peace plan, he famously told Aaron David Miller, who had negotiated peace agreements with other administrations, that he didn’t want to know about how things had worked in the past. “He said flat out, don’t talk to me about history,” Miller told Chris McGreal of The Guardian, “He said, I told the Israelis and the Palestinians not to talk to me about history too.”

Kushner apparently thought he could create a brand new Middle East with a brand new set of alliances that would begin with changing long standing geopolitics in Jerusalem, the city three major world religions consider holy. It is eye-popping to imagine what would have happened if we had torn up decades of agreements and tried to graft onto a troubled area an entirely new way of interacting, based not on treaties but on the interests of this new axis. Apparently, the hope was that throwing enough money at the region would have made the change palatable. But most experts think that weakening Jordan, long a key U.S. ally in the region, and removing its oversight of the holy sites, would have ushered in violence.

The heart of the American contribution to the idea of reworking the Middle East along a new axis with contracts, rather than treaties, seems to have been that enough will and enough money can create new realities.

The idea that will and money could create success was at the heart of the Reagan Revolution. Its adherents championed the idea that any individual could prosper in America, so long as the government stayed out of his (it was almost always his) business.

Critical Race Theory challenges this individualist ideology. CRT emerged in the late 1970s in legal scholarship written by people who recognized that legal protections for individuals did not, in fact, level the playing field in America. They noted that racial biases are embedded in our legal system. From that, other scholars noted that racial, ethnic, gender, class, and other biases are embedded in the other systems that make up our society.

Historians began to cover this ground long ago. Oklahoma historian Angie Debo established such biases in the construction of American law in her book, And Still the Waters Run: The Betrayal of the Five Civilized Tribes back in 1940. Since then, historians have explored the biases in our housing policies, policing, medical care, and so on, and there are very few who would suggest that our systems are truly neutral.

So why is Critical Race Theory such a flashpoint in today’s political world? Perhaps in part because it rejects the Republican insistence that an individual can create a prosperous life by will alone. It says that, no matter how talented someone might be, or how eager and dedicated, they cannot always contend against the societal forces stacked against them. It argues for the important weight of systems, established through time, rather than the idea that anyone can create a new reality.

It acknowledges the importance of history.