While many Americans are dubious about these comparisons, perhaps we should take the president at his word. Maybe we are engaged in a global war. If thats the case, then there is ample precedent for Mr. Bush to limit oil profits. Americans expect the president to do something that will lower the cost of gasoline.
Since last year gasoline prices have risen 44 percent. After Hurricane Katrina hit the Gulf Coast, the price of gasoline skyrocketed. The oil companies Citgo, Mobil, and Marathon all increased their gasoline prices by an average of 45 cents. The Department of Energy received over 5,000 calls in one day from consumers complaining that gasoline stations were gouging them. In Georgia, gasoline prices at some stations exceeded $6.00 per gallon. In Michigan, gasoline prices jumped almost $1.00 overnight.
Oil companies have made huge profits in recent years. Exxon Mobil has seen a 32 percent increase in its profits since 2004. Likewise, ConocoPhillips enjoyed a 56 percent increase in profits since last year. Much of the record profits are attributable to the fact that these companies bought oil reserves years ago when the prices were $10 to $25 per barrel. Oil prices are now going for upwards of $65 per barrel.
In 1941 President Roosevelt created the Office of Price Administration (OPA). The OPA was given the authority to determine the price of a product that it determined to be generally fair and equitable. Congress gave credence to this new governmental agency by passing the Emergency Price Control Act in 1942. The OPA also had the authority to sue corporations and retailers for damages if they violated the price limits. During the last year of World War II over 71,000 retailers were forced to pay $5.1 million for violating price limits.
Much like recent polls which have shown that Americans consider gasoline prices to be one of the most pressing issues that the government must address, in 1942 polls showed that the public wanted the government to limit the prices of many commodities. Consequently, the OPA simply froze most prices at their March 1942 level.
When the war ended the OPA was abolished. Not surprisingly, corporate profits soared. In the year following the end of World War II consumer prices rose 67.4%. According to economic historian Harold Vatter, one of the outstanding economic performance achievements by the United States in World War II was holding down prices, mainly by general government controls.
President Bush insists that we are engaged in a global battle similar to the Second World War. If thats the case, he should insist on limiting soaring oil prices. He has both historical and legal precedents to support this. However, its hard to imagine that he will. Given his close ties to the business community, and especially the oil industry, it seems likely that he wont do much to stop rising gasoline prices.
Gene C. Gerard taught history, religion, and ethics for 14 years at several colleges in the Southwest, and is a contributing author to the forthcoming book Americans at War, by Greenwood Press. He can be contacted at email@example.com.