Rapid rise in oil prices beyond oil executives

0

The cackling oil executives have returned. They are the guys who sit around corporate boardrooms and decide how high the price of gas will be at the pump, rubbing their hands greedily and emitting squeals of Mephistophelean laughter all the while. These executives exist only in the imaginations of economic demagogues, but that doesn’t make them seem any less real to Americans who are gripped by petroleum paranoia every time they don’t like the price of gasoline.

How powerful and resourceful must be the cackling executives? Boundlessly. Iranian president Mahmoud Ahmadinejad might strike most observers as deeply irrational, unworried about possibly prompting a nuclear exchange one day in the Middle East. But this interpretation misses the true measure of the man. Oil executives apparently have his ear: Why else would he do them such a huge favor by driving up world crude prices with his nuclear crisis?

Once you’re clued in to the alleged power of the cackling executives, their influence extends everywhere. With al-Qaida – its threat against Saudi Arabia keeps the world market good and jittery. With rebels in Nigeria – who maintain they are fighting for the rights of the Ijaw tribe in the Niger delta, but whose guerrilla war conveniently disrupts Nigerian oil production. With Chad – the corruptly governed African nation that is threatening to cut off its production in a dispute with the World Bank.

This is all on the supply side of the price equation, but world demand matters, too. Chinese Premier Deng Xiaoping must have been just as concerned about Texaco’s profits as the economic well-being of his country-men when he launched China’s market revolution 30 years ago. The resulting economic growth means that the country is slurping up ever-more oil – and driving up world prices, in a benefit to you-know-who.

Surveying all the forces in world politics and economics that play into higher prices at the pump, it puts retiring Exxon-Mobil CEO Lee Raymond’s otherwise outlandish $400 million retirement package in perspective. Isn’t that only fair compensation for devious international chicanery that surely required deft management skills and occasionally working in the office on weekends?

Then there’s the cackling executives’ most inspired manipulation of all – the change of seasons. Without winter turning to summer, there would be no need to make the shift-over in seasonal blends of gasoline, with the inevitable pinch in supply that comes with it. Cato Institute energy analyst Jerry Taylor points out that there is a price-gouging debate every spring when refineries make this switch and prices bump up. This year the disruption has been compounded by refineries switching from using the environmentally suspect methyl tertiary-butyl ether as an additive in gasoline to using ethanol, which is hard to transport from the Midwest to the coasts. The story of how the cackling executives managed this one is too complicated to relate, let alone their secret alliance with environmentalists to limit domestic supply and thus prop up prices further.

Of course, there is a less seductively simple explanation of rising gas prices than that a handful of oil executives have planned it. In a world market, prices will go up and go down, and the forces that play into those trends are large, complicated and mostly uncontrollable. The foolish conceit of our politics is that the oil market works only when prices go down. When the prices go up, it’s a scandal. So Speaker of the House Dennis Hastert and Majority Leader Bill Frist – showing either a dismaying attraction to the moronic or a desire to pretend to have such an attraction – have called on President Bush to investigate price gouging by the oil companies.

Maybe such an investigation will unravel a vast conspiracy of cackling executives, and the Federal Trade Commission will have to raid those corporate boardrooms to restore world crude-oil prices to their natural, low equilibrium. Such, at least, is the fevered dream of the petroleum paranoiacs.

Rich Lowry is a syndicated columnist. He can be reached via e-mail at: comments.lowry@nationalreview.com.

Advertisement