[R-G] [BillTottenWeblog] Why Won't Corporations Take on Big Oil?
shimogamo at attglobal.net
Sun Jul 6 09:07:09 MDT 2008
by Ralph Nader
www.counterpunch.com (June 19 2008)
Here is a counter-intuitive story for you. Why don't organized corporate
interests challenge damage or risks to their clear economic interests?
Think about oil prices for big consumers, not just your pocketbook.
Airlines are groaning, limiting flights, and laying off employees
because of the skyrocketing price for aviation fuel. Executives in that
industry say that fuel costs are close to forty percent of the cost of
flying you to your destination.
The powerful chemical industry is under pressure from the prices they're
paying for petroleum - probably their main raw material.
The powerful trucking industry is beside itself with diesel fuel going
to $5 per gallon.
You can add your own examples - cab companies, tourist industry, auto
companies, et cetera.
Why aren't these very influential lobbies throwing their weight around
Washington to get something done about the speculators on Wall Street
determining what is paid for gasoline and related petroleum products? It
is in their own economic interests.
To do what? Well, for starters, push Congress to legislate higher margin
requirements for the speculators at the New York Mercantile Exchange -
the same fellows who, based on rumors, took the price of a barrel of oil
up another $10 in one day.
Higher margin requirements (and wider disclosure rules) result in
dampening speculation by reducing the amount of borrowed money these
traders can use in their gigantic commodities casino.
Long-time member of the New York Stock Exchange, Michael Robbins - an
astute and fair analyst - says margin rules have historically been used
to dampen speculation on stock exchanges. He mentioned a time years ago
when the Federal Reserve raised the margin requirement to ninety percent
- meaning the traders had to put up ninety percent of their own money on
There are other moves that can be made by Washington to ease the oil
price crisis that is fueling inflation throughout the economy and
shocking consumers. Suffice it to say that ExxonMobil testified earlier
this month in Congress that absent the speculators, the price of a
barrel of crude oil would be half what it is today. That would mean
about $65 a barrel instead of $130 a barrel.
What else do these big corporate buyers of oil need?
Another area of major business firms not acting in their own interests
involves the proposal in Congress (HR 676) to establish a single-payer
health insurance system. That would mean government health insurance,
private delivery of health care, free choice of doctor and hospital and
saving about half a trillion dollars in insurance company administrative
expenses and computerized billing overcharges a year.
Presently, tens of millions of workers have employer-based health
insurance. For years, CEOs have complained that this cost puts them at a
competitive disadvantage with their corporate competitors abroad and in
Canada where there is universal government health insurance.
Former General Motors CEO, Jack Smith, publicly approved of the Canadian
medicare system, which he had experienced when he was head of GM Canada.
Under full medicare, these companies will pay less even with an assessment.
So, what's up here? We don't see these weighty corporate lobbies on
Capitol Hill supporting the 91 House members who have endorsed HR 676.
Then there is the small business lobby ostensibly represented by the
large National Federation of Independent Business (NFIB). Small business
is regularly subject to government policies and market discriminations
that put them at a disadvantage with their large competitors.
Presently, for example, a Small Business Administration report concludes
"Small businesses in their commercial sector faced a thirty percent
price differential for electricity and a twenty percent price
differential for natural gas. In the manufacturing sector, small
businesses faced a 28 percent price differential for distillate fuel
oil, a 27 percent price differential for natural gas, and a fourteen
percent price differential for coal."
Are these volume discounts all fair for the Big Boys? Doubtful. Don't
count on the NFIB to protest. More often than not, the NFIB talks small
business but walks the walk of the National Chamber of Commerce, which
primarily lobbies for the interests of large companies.
So, why the overall reticence to fight for their own economic interests?
First, corporations do not like to fight each other because they may
need each other on other matters. Second, they also have exposable
skeletons in their own closets. Third, they do not have to initiate a
business war of retaliation. Fourth, they do not want to give their
traditional labor, environmental and consumer adversaries cause to
strengthen their own power by, in effect, siding with these groups'
If investors in this country had any power over the companies they own -
as individuals, or through mutual funds and pension trusts - an
inquiring process could open up on this fascinating question.
But as Robert Monks - a leading shareholder activist and writer - has
said many times, those same CEOs have their own economic interests -
think CEO compensation - in keeping investors powerless.
Ralph Nader is running for president as an independent.
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