The Oily Factor

winthrop · 05-22-2008, 07:02 PM

Obama's Secret War Profiteering Tax

By Greg Palast for TomPaine.com/OurFuture.org
New York, May 22, 2008.

I can’t make this up:

In a hotel room in Brussels, the chief executives of the world’s top oil companies unrolled a huge map of the Middle East, drew a fat, red line around Iraq and signed their names to it.

The map, the red line, the secret signatures. It explains this war. It explains this week’s rocketing of the price of oil to $134 a barrel.

It happened on July 31, 1928, but the bill came due now.

Barack Obama knows this. Or, just as important, those crafting his policies seem to know this. Same for Hillary Clinton’s team. There could be no more vital difference between the Republican and Democratic candidacies. And you won’t learn a thing about it on the news from the Fox-holes.

Let me explain.

In 1928, oil company chieftains (from Anglo-Persian Oil, now British Petroleum, from Standard Oil, now Exxon, and their Continental counterparts) were faced with a crisis: falling prices due to rising supplies of oil; the same crisis faced by their successors during the Clinton years, when oil traded at $22 a barrel.

The solution then, as now: stop the flow of oil, squeeze the market, raise the price. The method: put a red line around Iraq and declare that virtually all the oil under its sands would remain there, untapped. Their plan: choke supply, raise prices rise, boost profits. That was the program for 1928. For 2003. For 2008.

Again and again, year after year, the world price of oil has been boosted artificially by keeping a tight limit on Iraq’s oil output. Methods varied. The 1928 “Redline” agreement held, in various forms, for over three decades. It was replaced in 1959 by quotas imposed by President Eisenhower. Then Saudi Arabia and OPEC kept Iraq, capable of producing over 6 million barrels a day, capped at half that, given an export quota equal to Iran’s lower output.

In 1991, output was again limited, this time by a new red line: B-52 bombings by Bush Senior’s air force. Then came the Oil Embargo followed by the “Food for Oil” program. Not much food for them, not much oil for us.

In 2002, after Bush Junior took power, the top ten oil companies took in a nice $31 billion in profits. But then, a miracle fell from the sky. Or, more precisely, the 101st Airborne landed. Bush declared, “Bring’m on!” and, as the dogs of war chewed up the world’s second largest source of oil, crude doubled in two years to an astonishing $40 a barrel and those same oil companies saw their profits triple to $87 billion.

In response, Senators Obama and Clinton propose something wrongly called a “windfall” profits tax on oil. But oil industry profits didn’t blow in on a breeze. It is war, not wind, that fills their coffers. The beastly leap in prices is nothing but war profiteering, hiking prices to take cruel advantage of oil fields shut by bullets and blood.

I wish to hell the Democrats would call their plan what it is: A war profiteering tax. War is profitable business – if you’re an oil man. But somehow, the public pays the price, at the pump and at the funerals, and the oil companies reap the benefits.

Indeed, the recent engorgement in oil prices and profits goes right back to Bush-McCain “surge.” The Iraq government attack on a Basra militia was really nothing more than Baghdad’s leaping into a gang war over control of Iraq’s Southern oil fields and oil-loading docks. Moqtada al-Sadr’s gangsters and the government-sponsored greedsters of SCIRI (the Supreme Council For Islamic Revolution In Iraq) are battling over an estimated $5 billion a year in oil shipment kickbacks, theft and protection fees.

The Wall Street Journal reported that the surge-backed civil warring has cut Iraq’s exports by up to a million barrels a day. And that translates to slashing OPEC excess crude capacity by nearly half.

Result: ka-BOOM in oil prices and ka-ZOOM in oil profits. For 2007, Exxon recorded the highest annual profit, $40.6 billion, of any enterprise since the building of the pyramids. And that was BEFORE the war surge and price surge to over $100 a barrel.

It’s been a good war for Exxon and friends. Since George Bush began to beat the war-drum for an invasion of Iraq, the value of Exxon’s reserves has risen – are you ready for this? – by $2 trillion.

Obama’s war profiteering tax, or “oil windfall profits” tax, would equal just 20% of the industry’s charges in excess of $80 a barrel. It’s embarrassingly small actually, smaller than every windfall tax charged by every other nation. (Ecuador, for example, captures up to 99% of the higher earnings).

Nevertheless, oilman George W. Bush opposes it as does Bush’s man McCain. Senator McCain admonishes us that the po’ widdle oil companies need more than 80% of their windfall so they can explore for more oil. When pigs fly, Senator. Last year, Exxon spent $36 billion of its $40 billion income on dividends and special payouts to stockholders in tax-free buy-backs. Even the Journal called Exxon’s capital investment spending “stingy.”

At today’s prices Obama’s windfall tax, teeny as it is, would bring in nearly a billion dollars a day for the US Treasury. Clinton’s plan is similar. Yet the press’ entire discussion of gas prices is shifted to whether the government should knock some sales tax pennies off the oil companies’ pillaging at the pump.

More important than even the Democrats’ declaring that oil company profits are undeserved, is their implicit understanding that the profits are the spoils of war.
And that’s another reason to tax the oil industry’s ill-gotten gain. Vietnam showed us that foreign wars don’t end when the invader can no longer fight, but when the invasion is no longer profitable.

Environment Man · 05-22-2008, 07:11 PM

Same boogeymen: oil men and politicians. The people can drive less and kick the boogeymen's asses. Place the blame where it belongs. The American driving public is the junkie blaming the dealer for their addiction.

itsmeeeeeee · 05-22-2008, 07:52 PM

um, i hate to point out the obvious...

but if hillary's policy is similar, and bush and mc cain's policies are even worse, why is this article try to make it appear it's all about obama?

and what does palast offer in terms of any alternative?
nothing!

it's obviously just an extremely thinly veiled, flimsy smear obama piece!

DanS. · 05-22-2008, 10:41 PM

I hate to be the one to say this but....the oil profits for our oil companies haven't come to be because of increased profit margins because of manipulating the supply as this article indicates. The margins have remained the same. The only thing that is changing is the demand. The volume they are producing and distributing is what is what's causing the raise it TOTAL profits. It's not as if they were selling(for example) 100 million barrels 10 years ago at $10 profit and are now selling 100 million barrels today at $20 profit. Instead they are now selling 200 million barrels at the same $10 profit....

obviously those numbers aren't accurate...but they do put into perspective.

Heretic · 05-22-2008, 10:45 PM

Quote:

Originally Posted by DRS112

I hate to be the one to say this but....the oil profits for our oil companies haven't come to be because of increased profit margins because of manipulating the supply as this article indicates. The margins have remained the same. The only thing that is changing is the demand. The volume they are producing and distributing is what is what's causing the raise it TOTAL profits. It's not as if they were selling(for example) 100 million barrels 10 years ago at $10 profit and are now selling 100 million barrels today at $20 profit. Instead they are now selling 200 million barrels at the same $10 profit....

obviously those numbers aren't accurate...but they do put into perspective.

Actually it's both. The oil companies know that they can slip in even higher increases in refined oil products and claim it's market forces that are wholly responsible when it clearly isn't. But I say let'em push their luck. Eventually they'll gouge too much and that'll lead to the end of their industry.

winthrop · 05-22-2008, 10:53 PM

Quote:

Originally Posted by itsmeeeeeee

um, i hate to point out the obvious...

but if hillary's policy is similar, and bush and mc cain's policies are even worse, why is this article try to make it appear it's all about obama?

and what does palast offer in terms of any alternative?
nothing!

it's obviously just an extremely thinly veiled, flimsy smear obama
piece!

No, it is not. I am disappointed that you would see it that way,
or that you would insist on seeing anything that does not explicitly
praise Mr. Obama and only Mr. Obama to the highest heavens as a
"smear" (although I am increasingly less surprised).

Look:

Barack Obama knows this. Or, just as important, those
crafting his policies seem to know this. Same for Hillary Clinton’s
team. There could be no more vital difference between the
Republican and Democratic candidacies. And you won’t learn a thing
about it on the news from the Fox-holes.

Here Mr. Palast points out both Democratic candidates understand
what is really at work here, and it has nothing to do with a lack of
drilling in ANWR or off the coasts of the U.S.
It is about price manipulation begun in 1928, with war as the means,
and in this case Iraq as the source, to be tightened when a price spike
is desired.
The pointed difference between the Democratic candidates and the
Republican candidate is the willingness of the Democrats to look at
this situation and assign a solution (which Mr. Palast is not
criticizing, as noted below) which removes the profit from this kind
of destructive manipulation.

More:

In response, Senators Obama and Clinton propose
something wrongly called a “windfall” profits tax on oil.

Here he includes both Clinton and Obama as proposing the tax, and
again his reference to it as "wrongly called" is not a criticism, but a
phrase making the point that the price manipulation is the result of
using war as a manipulating device, as indicated in the follow-up
sentences:

But oil industry profits didn’t blow in on a breeze. It is
war, not wind, that fills their coffers. The beastly leap in prices is
nothing but war profiteering, hiking prices to take cruel advantage of
oil fields shut by bullets and blood.

I wish to hell the Democrats would call their plan what it is: A war
profiteering tax. War is profitable business – if you’re an oil man. But
somehow, the public pays the price, at the pump and at the funerals,
and the oil companies reap the benefits.

If there is even implied criticism here, it is aimed toward both
candidates, Mr. Obama and Ms. Clinton, for using what Mr.
Palast considers to be euphemisms for what is really going on.

You may believe the following is criticism as well, but read it again:

Obama’s war profiteering tax, or “oil windfall profits” tax,
would equal just 20% of the industry’s charges in excess of $80 a
barrel. It’s embarrassingly small actually, smaller than every windfall
tax charged by every other nation. (Ecuador, for example, captures
up to 99% of the higher earnings).

Nevertheless, oilman George W. Bush opposes it as does Bush’s
man McCain. Senator McCain admonishes us that the po’ widdle oil
companies need more than 80% of their windfall so they can explore
for more oil. When pigs fly, Senator. Last year, Exxon spent $36
billion of its $40 billion income on dividends and special payouts to
stockholders in tax-free buy-backs. Even the Journal called Exxon’s
capital investment spending “stingy.”

At today’s prices Obama’s windfall tax, teeny as it is, would bring in
nearly a billion dollars a day for the US Treasury. Clinton’s plan is
similar. Yet the press’ entire discussion of gas prices is shifted to
whether the government should knock some sales tax pennies off the
oil companies’ pillaging at the pump.

More important than even the Democrats’ declaring that oil
company profits are undeserved, is their implicit understanding that
the profits are the spoils of war.
And that’s another reason to tax the oil industry’s ill-gotten gain.
Vietnam showed us that foreign wars don’t end when the invader can
no longer fight, but when the invasion is no longer
profitable.

Mr. Palast is saying that although Mr. Obama's tax plan takes a small
percentage, it is still a good and proper way to make unprofitable
the oil giants' reprehensible way of making money.
He also notes that in spite of its relatively small financial impact,
the Republicans oppose it.

Mr. Palast approves of the plan, this plan, therefore he
has no need to provide any other suggestion of his own (which is not
the job of a journalist in any case).

Further, if you take exception to the title of the piece, he calls it
"Obama's Secret War Profiteering Tax" because Mr. Obama is the
accepted front runner, if not the de facto nominee. He calls the tax
the "Secret War (the tax is not secret, the means of making profit
through war for the benefit of Big Oil is the secret) Profiteering Tax"
because that is what he believes it is, instead of a "windfall profits"
tax. He is saying call the origin of the profit what it is, not innocent
business practices of supply and demand.
He is not "picking on" Mr. Obama, he considers him the virtual
nominee and he agrees with his tax plan, only wishing the name could
be closer to the reality of its function.

A final note; I, too, am an Obama supporter, and have been since the
beginning, the only difference being that I support whomever is the
Democratic nominee, since I consider the issue of Supreme Court
appointments as well as energy and economic policy to be further
disaster if they remain in Republican hands.
Now that Mr. Obama is the decided nominee, he has nothing but my
full support.
Another difference is that I will not waste time with the losing
nominee, either obsessing over her methods or demanding she stand
down. She is likely after other rewards now, and those are Mr.
Obama's to provide or not, as he sees fit either morally or politically.

Rigged · 05-22-2008, 11:31 PM

Quote:

Originally Posted by winthrop

No, it is not. I am disappointed that you would see it that way,
or that you would insist on seeing anything that does not explicitly
praise Mr. Obama and only Mr. Obama to the highest heavens as a
"smear" (although I am increasingly less surprised).

Look:

Barack Obama knows this. Or, just as important, those
crafting his policies seem to know this. Same for Hillary Clinton’s
team. There could be no more vital difference between the
Republican and Democratic candidacies. And you won’t learn a thing
about it on the news from the Fox-holes.

Here Mr. Palast points out both Democratic candidates understand
what is really at work here, and it has nothing to do with a lack of
drilling in ANWR or off the coasts of the U.S.
It is about price manipulation begun in 1928, with war as the means,
and in this case Iraq as the source, to be tightened when a price spike
is desired.
The pointed difference between the Democratic candidates and the
Republican candidate is the willingness of the Democrats to look at
this situation and assign a solution (which Mr. Palast is not
criticizing, as noted below) which removes the profit from this kind
of destructive manipulation.

More:

In response, Senators Obama and Clinton propose
something wrongly called a “windfall” profits tax on oil.

Here he includes both Clinton and Obama as proposing the tax, and
again his reference to it as "wrongly called" is not a criticism, but a
phrase making the point that the price manipulation is the result of
using war as a manipulating device, as indicated in the follow-up
sentences:

But oil industry profits didn’t blow in on a breeze. It is
war, not wind, that fills their coffers. The beastly leap in prices is
nothing but war profiteering, hiking prices to take cruel advantage of
oil fields shut by bullets and blood.

I wish to hell the Democrats would call their plan what it is: A war
profiteering tax. War is profitable business – if you’re an oil man. But
somehow, the public pays the price, at the pump and at the funerals,
and the oil companies reap the benefits.

If there is even implied criticism here, it is aimed toward both
candidates, Mr. Obama and Ms. Clinton, for using what Mr.
Palast considers to be euphemisms for what is really going on.

You may believe the following is criticism as well, but read it again:

Obama’s war profiteering tax, or “oil windfall profits” tax,
would equal just 20% of the industry’s charges in excess of $80 a
barrel. It’s embarrassingly small actually, smaller than every windfall
tax charged by every other nation. (Ecuador, for example, captures
up to 99% of the higher earnings).

Nevertheless, oilman George W. Bush opposes it as does Bush’s
man McCain. Senator McCain admonishes us that the po’ widdle oil
companies need more than 80% of their windfall so they can explore
for more oil. When pigs fly, Senator. Last year, Exxon spent $36
billion of its $40 billion income on dividends and special payouts to
stockholders in tax-free buy-backs. Even the Journal called Exxon’s
capital investment spending “stingy.”

At today’s prices Obama’s windfall tax, teeny as it is, would bring in
nearly a billion dollars a day for the US Treasury. Clinton’s plan is
similar. Yet the press’ entire discussion of gas prices is shifted to
whether the government should knock some sales tax pennies off the
oil companies’ pillaging at the pump.

More important than even the Democrats’ declaring that oil
company profits are undeserved, is their implicit understanding that
the profits are the spoils of war.
And that’s another reason to tax the oil industry’s ill-gotten gain.
Vietnam showed us that foreign wars don’t end when the invader can
no longer fight, but when the invasion is no longer
profitable.

Mr. Palast is saying that although Mr. Obama's tax plan takes a small
percentage, it is still a good and proper way to make unprofitable
the oil giants' reprehensible way of making money.
He also notes that in spite of its relatively small financial impact,
the Republicans oppose it.

Mr. Palast approves of the plan, this plan, therefore he
has no need to provide any other suggestion of his own (which is not
the job of a journalist in any case).

Further, if you take exception to the title of the piece, he calls it
"Obama's Secret War Profiteering Tax" because Mr. Obama is the
accepted front runner, if not the de facto nominee. He calls the tax
the "Secret War (the tax is not secret, the means of making profit
through war for the benefit of Big Oil is the secret) Profiteering Tax"
because that is what he believes it is, instead of a "windfall profits"
tax. He is saying call the origin of the profit what it is, not innocent
business practices of supply and demand.
He is not "picking on" Mr. Obama, he considers him the virtual
nominee and he agrees with his tax plan, only wishing the name could
be closer to the reality of its function.

A final note; I, too, am an Obama supporter, and have been since the
beginning, the only difference being that I support whomever is the
Democratic nominee, since I consider the issue of Supreme Court
appointments as well as energy and economic policy to be further
disaster if they remain in Republican hands.
Now that Mr. Obama is the decided nominee, he has nothing but my
full support.
Another difference is that I will not waste time with the losing
nominee, either obsessing over her methods or demanding she stand
down. She is likely after other rewards now, and those are Mr.
Obama's to provide or not, as he sees fit either morally or politically.

I am not surprised, nor should you be. Some people have a problem with not seeing what is actually written, they would rather see what they want. They jump to unsupported conclusions, because it's easier than being accountable.

Itsmee very rarely graces us with her presence, by responding to the many controversial threads, so naturally nothing you post will warrant a response that requires anything outside of the usual misanthropy

Rigged · 05-22-2008, 11:37 PM

Quote:

Originally Posted by The_Heretic

Actually it's both. The oil companies know that they can slip in even higher increases in refined oil products and claim it's market forces that are wholly responsible when it clearly isn't. But I say let'em push their luck. Eventually they'll gouge too much and that'll lead to the end of their industry.

So you think they make it up? That a weak dollar, high demand, and other factors don't have anything to do with it?

DRS--pretty much summed it up
...but I understand it's much easier to point fingers and tell half-truths based on assumptions, then be confounded by forces which are to complex for you to take the time to understand

Heretic · 05-23-2008, 12:06 AM

Quote:

Originally Posted by Rigged

So you think they make it up? That a weak dollar, high demand, and other factors don't have anything to do with it?

Quote:

Originally Posted by The_Heretic

Actually it's both. The oil companies know that they can slip in even higher increases in refined oil products and claim it's market forces that are wholly responsible when it clearly isn't. But I say let'em push their luck. Eventually they'll gouge too much and that'll lead to the end of their industry.

I hate repeating myself when the first statement is that clear.

Quote:

DRS--pretty much summed it up
...but I understand it's much easier to point fingers and tell half-truths based on assumptions, then be confounded by forces which are to complex for you to take the time to understand

They take advantage of market fluxuations to gouge and extort the public as well as the government.

winthrop · 05-23-2008, 12:09 AM

Quote:

Originally Posted by Rigged

I am not surprised, nor should you be. Some people have a problem with not seeing what is actually written, they would rather see what they want. They jump to unsupported conclusions, because it's easier than being accountable.

Itsmee very rarely graces us with her presence, by responding to the many controversial threads, so naturally nothing you post will warrant a response that requires anything outside of the usual misanthropy

My surprise is limited, in fact, to Itsmeeeeeee, since she is among the
most fair of the Obama-Only supporters, and several others.
There are a couple, however, whose response similar to itsmeeeeeee's
in this rare instance, would not surprise me.

In any case, hopefully the piece warrants another reading and a more
objective evaluation.

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