lead, nickel, tin, zinc, scrap steel, lumber, gold, platinum, silver, rubber, wool, and others. How much is added to the price of food, the price of energy, the price of furniture, the price of appliances, and the price of cars because of the price manipulation caused by buying and selling these commodities without adding any value whatsoever to the commodity.
Again, the role of the government (Federal, state and local) is to manage, direct and regulate the economy so that the economy can most efficiently and effectively satisfy the needs and desires of all people for food, water, clothing, shelter, furniture, appliances, energy, transportation, education, healthcare, disability care, old age care, etc. The government is failing in its responsibility to supervise and manage the economy by failing to regulate the commodity markets and eliminate these non-value-added actions by investors. The government must regulate the marketplace for commodities. The government must require and enforce that any person, persons or business that wants to engage in buying and selling commodities of any kind whatsoever (crude oil, metals, grains, farm animals, etc.) must be capable of physically storing, handling and transporting the commodities that they will buy and sell in the quantities that they intend to buy and sell. Furthermore, every purchase must result in the physical possession of the commodity before it can be sold. The practice of individuals and businesses who buy and sell commodities without ever taking physical possession of the commodity is a serious problem within any economy. These individuals who engage in buying commodities with the only intention of selling those commodities at a higher price without adding any value constitute a serious economic disorder that needs to be corrected immediately. It has been claimed that forty to fifty percent of the price of crude oil is due entirely to so-called investors who add no value to the crude oil supply chain and are not even capable of adding value to the crude oil supply chain. And this is true for other commodities as well. There has been a global food crisis for the ten several years with high prices for rice, wheat and corn and the non-value-added activities of commodity investors is one of the main causes of this crisis.
The government; Federal, state and local, regulate who can engage in a business or profession. The government regulates who can practice medicine or dentistry, who can sell drugs, and who can practice law. Even electrical contracting, plumbing contracting, and the various building contracting professions are regulated by the government. The government will only allow a qualified person, persons or business that can perform the work according to industry standards, to engage in a particular enterprise. The government is fully within its power to regulate the commodities trading industry and require those people engaging in the buying and selling of commodities to be qualified, that is, capable of handling, storing, transforming or transporting the particular commodity, or adding some value to the commodity.
While commodity speculators were partly responsible for the significant rise in the price of oil from 2000 to 2008, the major oil companies themselves are mainly responsible for the extreme and disordered rise in oil that precipitated the recession. In the same period that oil prices saw significant increases, oil company profits saw corresponding significant increases. Profits represent the difference between sales and costs. Oil companies either produce petroleum from their own fields, produce petroleum from non-owned fields for which they have contracts, or they buy petroleum on long-term contracts. It is important to note that the oil companies, like any fiscally conscious company, seek to control their costs. To control their costs, oil companies will enter into long-term contracts with their suppliers to stabilize the costs of petroleum. Unfortunately, most people naively think that the oil companies are paying commodity market price for the oil that they use to produce gasoline. That is absolutely incorrect. The cost of crude oil for the major oil companies has remained relatively stable from 2000 to 2008. This should be clear from the fact that during that time they realized record profits. The extremely high profits that the oil companies realized were the result of extremely high prices, artificially manipulated by Big Oil, with relatively stable costs. Profit equals price less cost. Profits increased dramatically because prices increased dramatically while costs remained the same.
The price of gasoline in the United States is primarily the result of manipulation by Big Oil. Through a long-term campaign by capitalist economists in which people have been brainwashed to think that all prices are the result of ‘supply and demand ’, through propaganda associated with commodity market trading, and through the subordination of the Federal government through its lobbying efforts; Big Oil is seeking to maximize its profits by maximizing the selling price of gasoline, diesel fuel, heating fuel, natural gas, propane, chemicals and all of the other derivatives of petroleum. And there is no one and nothing to control them. Big Oil has significant influence on the government (Federal, state, county and local). National energy policies, environmental policies and even foreign policies are dominated by Big Oil to the detriment of most of the US population.
What can be done to manage the price of gasoline, diesel fuel, heating fuel, natural gas, propane, chemicals and all the other various derivatives of petroleum which have a major and critical influence on the entire US economy ?
First, gasoline, diesel fuel, heating fuel, natural gas, propane, chemicals and all the other various derivatives of petroleum need to be declared national strategic economic resources. National strategic economic resources have an extremely high influence on the entire economy. An increase in the price of a national strategic economic resource has a direct and immediate effect on the economy. Because of this, these resources must be carefully monitored by the government and price increases outside of defined limits must be reviewed and approved by the government. Next, the financial records for the last ten years of every US based oil company (as well as every oil company that does business in the US) need to be made public. What needs to be disclosed to the public is the cost that each oil company pays for a barrel of crude oil, the total amount of revenue generated by a barrel of oil and the amount of profit that the company makes on each barrel—all on a quarterly basis for the last ten years. It will be clear when the oil companies began to manipulate prices and deceive the public, it will be clear as to the extent of the profits that the oil companies have been making, and it will be clear that prices need to be managed.
Price management should not be limited to oil and its derivatives. While excessive and inordinate gasoline, diesel, heating fuel and natural gas prices have had perhaps a severe impact on the economy and the lives of most Americans, the prices of food, electricity and healthcare have also risen dramatically and inordinately within the past ten years. Like petroleum, these items are controlled by oligopolies that have manipulated their respective markets. Like petroleum, these industries are currently out of control and need immediate government intervention.
Was the price of gasoline at over $4.00 a gallon fair? In 2000 the price of gasoline was $1.25 a gallon and the oil companies were making a decent profit at this price? From 2000 to 2008 the price of gasoline increased about 18.5% per year and the profits for the oil companies increased proportionately. If the price of gasoline was subject to government oversight and could increase by only five percent a year during that time instead of 18.5%, then the current price of gas would have only risen to about $2.40 a gallon in 2008 and it would never have exceeded $4.00 a gallon. If the government limited the price increase of gasoline to five percent per year, the oil companies would still have seen their profits increasing considerably.
The Oil Companies do not want to sell gasoline at a fair price even though a fair price would generate a reasonable profit. The intent and focus of the oil companies is to maximize profits, which they can do primarily by maximizing price and minimizing costs and expenses. The owners and executives of the oil companies hide behind the cloak of the corporation, an amoral yet legal person. Whatever the owners and executives do, as long as it is in the name of the corporation, is neither right nor wrong as the common phrase ‘it is neither right nor wrong, it is just business ’. So, the oil companies are intent on maximizing profits and they are not constrained by morals. From the corporation’s point of view, anything and everything is justified in seeking maximum profits. Wars have been started for the sole purpose of maximizing profits.
Will a corporation deceive consumers by presenting false and misleading information? Absolutely! Will a corporation manipulate the market? Absolutely! Will a corporation engage in unfair business practices in order to eliminate its competition ? Absolutely! The owners and executives of corporations deceive, manipulate and compete unfairly because