Economic Outlook: The Government's Part in Raising the Price of Oil

Our government has a direct hand in raising the price of oil, the increase in OPEC oil prices was conceived and engineered right here in the United States.
By the MOTHER EARTH NEWS editors
September/October 1977
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The government is guilty of conceiving and engineering raising the price of oil.
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In Washington it is widely known that since 1971, the United States has encouraged Middle East oil-producing states to keep raising the price of oil.

Raising the Price of Oil: A Created Energy Crisis

Julian M. Snyder, who publishes International Moneyline (Suite 2011, 25 Broad St., New York, N.Y. 10004), seems to have unusually strong connections with "the powers that be" in the Arab OPEC nations. And, for months, Mr. Snyder has been saying that the tremendous increase in OPEC oil prices back in 1973 was conceived and engineered right here in the United States.

"It is . . . widely known on the highest levels in Washington," says Mr. Snyder, "that since 1971, the United States has encouraged Middle East oil-producing states to raise the price of oil and keep it up. This is not some crackpot story, but information documented in black and white by open files at the State Department and by on-the-record interviews with such individuals as James Akins (former Ambassador to Saudi Arabia), Joseph Sisco (former Assistant Secretary of State), John Sawhill (former Energy Administrator), and others."

Mr. Snyder charges that OPEC (the Organization of Petroleum Exporting Countries) was originally created by the U.S. State Department at the urging of the big banks and the international oil companies which in his words, have "dominated the U.S. Government for years". These banks and energy companies profit mightily from the current international imbalance in oil payments and again in Mr. Snyder's words, "are perfectly willing to sell the people of the United States down the river for the sake of getting a further hammerlock on the commerce of the planet. They may have even more ambitious plans."

The Energy Crisis is a Hustle!

Julian M. Snyder's charges may sound preposterous when made by one lone economist. But they take on added weight when supported, at least in part, by the prestigious Wall Street Journal. And that's just what the WSJ has been doing with editorials such as "1,001 Years of Natural Gas" (April 27, 1977), "ERDAgate" (May 20, 1977), and "The 'Energy Crisis' Explained" (May 27, 1977).

That last editorial began with these words, "The energy crisis is a snare and a delusion. Worse, it's a hustle." The WSJ editorials — and letters received by the paper from petroleum engineers and non-Washington economists — flatly state that the world is nowhere close to consuming all the planet's oil and natural gas. All we have to do to ensure plentiful supplies of petroleum for uncounted decades, they say, is get the fumble-fingered politicians completely out of the picture and let supply and demand fight it out in the marketplace. One WSJ energy editor states that we have enough untapped natural gas in this country "to break the oil cartel" any time we want to.

Meanwhile, an M.I.T. study has shown that if the federal government would stop taxing domestic producers $2.00 a barrel on the oil they pump while, at the same time, paying refiners a $3.00 subsidy for every barrel of oil imported from OPEC producers . . . domestic production could be increased by 13%. And Thomas Gold, Director of the Center for Radiophysics and Space Research at Cornell University, has stated that far more hydrocarbon compounds were mixed into this planet's primary materials when it was formed than most people yet realize. "Deep down," he says, "the world has oil reserves sufficient to last 20 million years."

Has Anyone Told You What Carter's "Solution" to the Energy "Crisis" is Going To Cost You?

The proposed new Department of Energy will have — for starters — a budget of $10.6 billion. That's about double the value of all the oil the U.S. imported from Saudi Arabia last year. It's more than all the money spent by the whole petroleum industry in the exploration for oil, gas, and related resources in all of 1975. It's $800 million more than the combined (so-called "obscene") 1974 profits of the planet's seven largest international oil companies.

Or, to put it another way, the beginning budget for the proposed DOE is about equivalent to putting a brand new, arbitrary tax of $3.00 a barrel on every barrel of crude oil that is produced domestically. And who's going to pay that tax? You are.

And that's just the beginning. Government agencies, you know, never seem to get smaller with age . . . and they never seem to contribute anything really positive to the solving of something like today's energy "crisis". Instead, they grow like cancer while increasingly thwarting the free market incentives, checks, and balances which, in the end, are the only tools with which this "problem" actually can be solved.

Are You Going to Pay That Tax? Of Course You Are! Why?

Because, as Nicholas Von Hoffman pointed out not long ago in one of his syndicated newspaper columns, you belong to a nation of consumers. And "The American Consumer," says Von Hoffman, "is by definition a dupe, a fool, an ignoramus, an organism incapable of making a sound judgment about any choice." We used to be customers "smart enough to know not to buy coffee at $5 a pound," Von Hoffman states. But now we're consumers who go on buying coffee (and $10.6 billion budgets for agencies that obviously can do nothing but futz up a government-created and government-proclaimed "crisis") vaguely hoping the government or Ralph Nader or somebody will do something.

Whatever Happened to Craftsmanship?

Thomas Hughes, in a recent Printing Impressions article, noted that Lyndon Johnson was the first President in U.S. history to spend a hundred billion dollars in one year when the federal budget hit $106.8 billion during 1962. Yet only nine years later — in 1971 — the federal budget was $200 billion. And four years after that, $300 billion. The budget this year is set at $413 billion and, if the trend continues, our federal government will spend over $500 billion in 1979! Mr. Hughes's conclusion: "The printer who is 'with it' inflation-wise . . . will make it. The pure craftsman won't."

Are We Financing the Hangman?

"Lenin is said to have observed that when the time comes to hang all capitalists they will be found bidding on the rope contract," wrote Patrick Buchanan in his March 20, 1977 syndicated column. Mr. Buchanan then pointed out that, if anything, Lenin vastly underestimated the idiocy of today's Western businessmen . . . who not only want to sell the rope, but finance the purchase on E-Z credit terms too! "The new Soviet Empire is being fed on American grain and financed by Western capital," he observes. "In the last five years, as the Soviets have completed construction of their Western-aimed and awesome war machine, outstanding Western credits and loans to the Soviet bloc rose from under $10 billion to more than $40 billion. If someday the Eastern bloc collectively defaults on its loans, an earthquake would instantly hit Western financial markets, and bank after bank would come tumbling down in ruins."

And What About the Hangman's Big Brother?

As great a threat to Western financial institutions as the $40 billion in loans to our enemies may be, it is still dwarfed by the $190 billion that the West now has out to underdeveloped Third World countries. What will happen to the financial underpinnings of the West if those loans are defaulted? And they are already being defaulted, although no one wants to admit it. Zaire, for the second time in two years, recently had payments on its loans "rescheduled" . . . and a growing number of Third World nations are now demanding that their past loans be "forgiven" and that they be extended fresh new lines of credit.

Hooray for Our Giant Step Backward!

While satellite television flashed the pomp and circumstance of Queen Elizabeth's Silver Jubilee to the waiting peasants of the world, Lloyd's Bank made an assessment of Liz's reign that It's doubtful anyone saw on the telly: There were 203,000 people unemployed in Great Britain 25 years ago when King George V died and Queen Elizabeth took the throne . . . now there are 1.31 million. The British pound was worth $2.81 in fairly substantial American dollars then. It's now worth only about $1.70 in our current mini-dollars. Food that cost one pound in London in 1952 . . . costs five pounds now. A market basket of other goods is now 4-1/2 times as expensive as it was 25 years ago . . . and housing is six times as costly.

Let Them Eat Paper: If you thought our warnings (see MOTHER NO. 45) about U.S. politicians cold-heartedly paying off social security, FDIC, and other obligations with crisp new — but totally worthless — paper dollars was a bit overblown . . . perhaps you missed the exchange a year ago between the head of the social security program and U.S. Senator William Proxmire, who chairs the Senate Banking Committee (part of the conversation was printed on the front page of the Wall Street Journal's May 23, 1977 issue). Senator Proxmire said: "We have the power to provide that (social security) money, and we are going to do it. It may not be worth anything when the recipient gets it, but he is going to get his benefits.

You Could do Worse Than Listen to the Swiss

If the Swiss know about anything, they know about money. And the Foreign Commerce Bank in Zurich recently made this observation: "The world economy is now approaching the end of the second decade of generally accelerating national fiscal deficits. But it is only in the last five or six years that the inevitable results of these policies have become glaringly obvious. To wit: the incremental destruction of the value of currencies and therefore the destruction of the value of fixed currency-denominated assets. It should also be pointed out that as the Inflationary cycle continues, there will come a time when current holders of depreciating paper money will seek a reliable store of value out of necessity. History tells us that gold and silver are preferred stores of value and, over any substantial period of time, are the only thoroughly dependable means of preserving the value of one's capital."

You've been warned. Powerful forces are loose in the world . . . forces that love to feed you circuses (such as Queen Elizabeth's Silver Jubilee) and beg for your help in fighting trumped-up "crises" . . . while cold-bloodedly (and stupidly) working furiously behind the scenes to trample, tear apart, and gain control of everything you hold dear.

Don't believe the promises of any politician (and if, by chance, you're lucky enough to stumble across a true statesman, let us all know). Beware of all bureaucrats. Be extremely suspicious of trading any portion of your life for paper issued by governments, large corporations, insurance companies, and the other printers of "money", policies, annuities, pensions, stocks, bonds, etc.

Put your faith in yourself and in real wealth. Land. A house. Livestock. A garden. Energy systems (solar collectors, a wind plant, small hydroelectric equipment, etc.) that you directly control. Learn barterable skills that others will need in good times and bad. Stash away some gold and silver coins, bottles of liquor, and other trade goods that will always be worth something no matter how wildly the value of paper money fluctuates. Keep a low profile, but quietly raise yourself out of the helpless "consumer" class and into the ranks of the self-reliant. Develop an appreciation of the things that money can't buy. Be happy. Leave the troubles of the world to the "consumers" who never really live firsthand . . . but who only watch the pale reflections of life that flicker across the screens of their TV sets.


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