Thursday, April 08, 2004

Bush's Oily Announcement

The other day as I was in my gas-guzzling truck, NPR announced the OPEC Ministers had decided to cut production. Of course, everyone immediately knew that gas prices would be going up. And of course, the bloodsucking oil companies boosted prices almost immediately. How that's not price gouging, I still don't know. But what stuck me was Bush's statement in response to the announcement.

He said, "The price of oil should be dictated by the free market."

What, What, What? What an odd, and deeply stupid thing for the oil man President to say. He knows there is no such thing as a free market in oil. If there were, it would a series of price booms and busts, just as it was before oil exploration and drilling companies invented production cartelization over a century ago. What on earth could he have meant by this cryptic statement?

It seems clear now that he meant the government, specifically, the United States' government, shouldn't be be involved in trying to manipulate, i.e. keep down, the price of oil to the detriment of his Saudi buddies.

Yes, as a candidate he chastised Clinton for not sticking it to OPEC, or even trying to bring down the cost of oil. Yes, he implied that as an oil man he would use his influence to that end.

Now, however, he has different priorities. Higher oil prices help Bush now. Iraqi production will go father in paying for reconstruction, and much will go directly into the pockets of U.S. oil companies (key donors). Political pressure, and the political constituency, for domestic production will grow. He can revisit the ANWR drilling issue, and possibly win even in the face of a study by his own Energy Department concluding that drilling ANWR would have only marginal impact on America's energy picture. And he can strengthen his Saudi allies heading into elections. All positives for Bush, and all good reasons why "the free-market" should be allowed to set the price of oil, despite the hurt it will cause the U.S. consumer and economy.

Why isn't Bush worried about a slow-down in the economy going into the election as a rusult of higher energy prices? The results won't really take effect until after the election. And besides, it is not a consumer led recovery; it is a debt and corporate profit led recovery. That's why it has been jobless - it has been largely led by consumer debt spending (finance is another key Bush donor) and new corporate capital investments stemming from record profits; but the majority of those investments are going overseas. The robust GDP growth reflects profits in the corporate sector and capital gains for stock owners (the ultra rich - another key Bush donor base), lots of debt financing across the board, a large amount of insurance settlements, bad debt and bad investment write-downs by corporate America, and a growing amount of depreciation due to tax changes and the faster pace depreciation for computer investments. GDP does not have to be growth, it just has to be a positive number, and corporate accounting practices are notorious for finding a silver lining in almost any financial transaction. If you factor out these phantom sources of GDP expansion, the American economy has been contracting or growing only very slowly for the entire Bush court-ordered malignancy.

These trends will not be much affected by higher energy prices, and Bush knows it. So, to hell with it, "Let them drink gasoline!"


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