Editorial

Profits of Perfidy

Saudi Arabia has effectively sided with Russia in its war upon Ukraine and it has sided with the Republican Party in its war against democracy in the US.

President Joe Biden was mocked for meeting in July with the de facto ruler of Saudi Arabia, Crown Prince Mohammed bin Salman, when Biden tried to persuade the prince to increase oil production. Instead, Salman opted for the windfall profits that will come with the decision of the Organization of Petroleum Exporting Countries Plus to cut crude oil production by two million barrels per day.

MBS, as the Saudi prince is known, has shown himself to be an untrustworthy ally with a penchant for betrayal. He got along just fine with Donald Trump and gave Trump’s son-in-law a $2 billion going-away gift in bankrolling the private equity fund Jared Kushner started after he left the White House.

Biden should respond to MBS’s contempt by withdrawing military support for the corrupt Saudi monarchy. The US has provided access to military jets and pilot training for the Saudi-led war against Houthi rebels in Yemen. During seven years of war, Saudi-led airstrikes have killed nearly 9,000 civilians in Yemen and human rights groups have documented more than 300 airstrikes that are likely war crimes or violations of the laws of war, JustSecurity.org reported. UN monitoring bodies have found US weapons used in many of these attacks.

Biden should cut off those armaments for Saudis and instead work to restore relations with the Iranian Republic. That should get MBS’s attention.

The Biden administration could lift economic sanctions that block Venezuela and Iran from exporting oil, if they’re willing to buck the OPEC+ production limits.

There may be resistance in the US to dealing with Venezuela and particularly with Iran, which is facing riots over the brutality of its morality police in enforcing decency standards, but Iran’s human rights problems arguably are no worse than the Saudi monarchy’s.

Iran deserves some consideration after it agreedin 2015 to limit the enrichment of nuclear fuels in the Joint Comprehensive Plan of Action with the US, the UK, Russia, France, China, Germany and the European Union. After Donald Trump took over in 2017, he reneged on the deal and re-imposed crippling economic sanctions on Iran. Tehran abandoned the limitations on nuclear enrichment and has refused to meet directly with US negotiators ever since, but Iran’s President Ebrahim Raisi told the UN General Assembly Sept. 21 his country is serious about reviving the deal.

In his own speech at the UN, Biden said “We will not allow Iran to acquire a nuclear weapon,” but the US is ready to rejoin the accord if Iran steps up its commitments.

A renewed surge in fuel prices also challenges central bankers in their efforts to get a handle on controlling global inflation. As Thom Hartmann notes in this issue, both the World Bank and the United Nations Conference on Trade and Development (UNCTAD) are warning the Federal Reserve and other central banks against raising interest rates too high in an effort to fight inflation, which the World Bank and UNCTAD officials fear could lead to a prolonged global recession.

The rising interest rates are designed to cool off the economy, which has recovered 10 million jobs since Biden’s inauguration, regaining the jobs lost under Trump during the COVID lockdown, and dropping the unemployment rate to 3.5% in September as employers added 263,000 jobs. Wages had been growing at a 4.8% annual rate,.but wage growth slowed to 0.3% in September, consistent with the Fed’s 2% inflation target, showing that the much-feared wage-price spiral was not occurring.

Biden can fight inflation by enforcing antitrust authority against US oil companies that take advantage of the OPEC+ action as an excuse to raise gasoline prices in the US. The Department of Justice, Federal Trade Commission and Securities and Exchange Commission should take actions against businesses that have taken advantage of economic disruptions to gouge American consumers.

Congress should pass the Big Oil Windfall Profits Tax Act (HR 7061), which would impose an excise tax on windfall profits of large oil companies, with tax revenues to be rebated to consumers. The bill has not advanced from the House Ways and Means Committee, and oil companies expect it to die in the Senate if it gets out of the House, but Congress members ought to vote on it.

The bill was filed by Rep. Ro Khanna (D-Calif.) in March, after Russia’s invasion of Ukraine sent oil prices soaring and US oil companies posted record profits, but the bill stalled when gas prices came down in the summer. With a month to go before the midterm elections on Nov. 8, prices began to creep up again after OPEC+ announced the production cuts, raising suspicions Big Oil was working in tandem with OPEC+ and Russia to help Republicans regain control of Congress. The nationwide average was $3.91 per gallon of gasoline Oct. 9, AAA reported.

Congress also should reverse the 2015 change in law that allowed US oil companies to export crude oil overseas. The US exports around four million barrels a day.

Democrats should proceed with the NOPEC bill (S. 977) — No Oil Producing and Exporting Cartels — which would allow the Justice Department to sue nations that restrain trade in oil, natural gas or any petroleum product.

The NOPEC bill easily cleared the Senate Judiciary Committee on a bipartisan basis in May, but it hasn’t come to the floor.

Politico noted, “It’s unclear if Republicans … will be eager to help Democrats address their OPEC problem at a moment when the GOP is accusing Biden’s policies of causing high fuel prices by limiting oil and gas leasing on federal lands.”

In fact, the Biden administration has noted that the oil and gas industry has more than 9,000 permits to drill on federal and Indian lands that are not being used. And oil companies claim refineries have been running at reduced capacity as older plants have been forced to shut down for maintenance. But during Biden’s first year in office, PolitiFact noted, the US produced an average of about 11 million barrels of crude oil per day compared to Trump’s 9 million barrels per day in his first year. The US Energy Information Administration in January forecasted that US oil production will average 12.4 million barrels per day in 2023, surpassing the record high for domestic crude oil production set in 2019. And Biden’s denial of a key permit for the Keystone XL pipeline on his first day in office in 2021 had negligible impact on American fuel prices, since the pipeline would carry 830,000 barrels of tar sands oil per day from Alberta, Canada, to the Texas Gulf Coast, where the tar sands would be processed for export overseas, not to gasoline pumps in the US. And the US already exports four million barrels of crude oil per day.

That won’t stop Republicans from lying about it, of course. But if gas prices go up, it’s more the GOP’s fault than Democrats’. — JMC

From The Progressive Populist, November 1, 2022

Populist.com