Oil Price Gouging: From Enron With Love

Robbing the bank today to save the bank tomorrow is a zero-sum game. When low-income Americans can no longer afford to drive longer distances getting to work, they settle for lower wages available close to home. In inner-city and remote rural locations, where employment opportunities are scarce or non-existent, employment may no longer even be feasible. Present-day welfare demands can be predicted to rise, and social security contributions predicted to fall.

This problem is not limited to oil markets. In the name of “deregulation”, investors are now raiding electricity markets nationwide. This is driving up home energy costs for everyone, causing utility companies to defer lifecycle replacement of end-of-life equipment, resulting in massive power outages caused by wet or cold weather failures of antiquated step-down equipment never before experienced by customers.

For example, several extended power outages in Missouri affecting over ½ million customers each can be attributed to failure of Ameren U.E. to proactively replace old step-down transformers, which explode when rusting enclosures permit moisture entry during inclement weather. Here is proof: this past February, I counted seven step-down transformer explosions, on one day, within earshot of my home after a large wet snowstorm.

Clearly, constraints must be applied to all energy markets to ensure free resource exchanges within markets undistorted by giant speculative investors.

High energy costs make international outsourcing of manufacturing and exportable service industries attractive in countries where workers commonly walk, use public transportation, ride bicycles, or live in corporate dormitories. High energy costs also raise the bar at which Americans will work, making illegal immigration more attractive to foreigners and American businesses.

The Answer

The U.S. House of Representative recently passed oil price-gouging legislation that would force the major oil companies to break up. [23] This feel-good legislation will not fix the problem because it does not change the passive but orchestrated role played by oil producers and speculators profiting from the gouging game.

For many years, Presidents and politicians have repeatedly promised actions to reduce dependence on foreign oil, while knowingly permitting oil companies to decrease stateside production capacity and increase our dependence on foreign oil. The jig is up. No politician can survive without taking decisive action to end the “Enroning Of America”. This must be one of the leading issues in upcoming Congressional and Presidential races.

Five things should be done. A free market will not exist until speculative investing is fully disallowed for critical energy commodities including oil and electricity:

1. Small investors holding retirement accounts should boycott investment firms and mutual funds that tout or place any of their funds in spot market futures. You do not gain by paying outrageous gas prices now only to be paid back in cheaper dollars later.
2. Consumer class-action lawsuits, perhaps invoking RICO should be filed against oil producers and investment firms, to recover illicit profits and return them to consumers. Governmental bodies who received windfall taxes should also be named and forced to return the taxes. With a case like this, it won’t be necessary to shop the case out to the corrupt the corrupt bench in Madison County, Illinois.
3. Speculation must not be permitted in mission-critical markets. Congress must enact Federal legislation limiting spot-market trading in oil and utilities to companies that directly produce, refine, or sell oil.
4. Congressional hearings must be had to interview executives in both industries and discover the extent of monopolistic collaboration.
5. If information discovered in Congressional hearings and class-action suits warrants, criminal charges should be filed against executives in both industries who have knowingly collaborated to gouge the American consumer.

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David R. Usher is Senior Policy Analyst for the True Equality Network and President of the American Coalition for Fathers and Children, Missouri Coalition

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