Vice President Cheney said yesterday a spike in world oil prices is entirely possible as the West deals with Iran's nuclear ambitions. After Cheney's comments the price of oil climbed to over $67/bbl in an inexorable march to new highs.
There is something terribly wrong here. The rise in oil prices poses an enormous burden on our economy and perpetuates vast transfers of wealth to nations who wish us ill. And yet, in the oilpatch there is muted satisfaction that oil prices are ever ratcheting higher and earnings reports ever stronger. And the oilpatch has friends. VP Cheney's political base is Wyoming and President Bush's Texas: two States that have enjoyed an abundance of riches since the onset of the war on terror. With each threat, with each geopolitical event that heightens fears of oil dislocation the oilpatch grows wealthier. And as Texas and Wyoming et al prosper those living in the Midwest or Northeast and west have trouble paying their heating bills.
Back in 1962 John F. Kennedy, issued a statement on the then steel crisis, and I quote "Simultaneous and identical actions of United States Steel and other leading steel corporations increasing steel prices by $6 a ton constitute a wholly unjustifiable and irresponsible defiance of the public interest in this serious hour in our Nation's History, when we are confronted with grave crises in Berlin and Southeast Asia, when we are devoting our energies to economic recovery and stability, when we are asking reservists to leave their homes and families for months on end and servicemen to risk their lives...." The Steel industry backed down.
The oil industry will respond that it is the market that sets the price. As I have set forth in my blog "A Funny Thing Happened On the Way to the Gas Pump," January 15, 2006, that is a highly questionable contention. Yet the influence of the oil industry and their hires on "K" Street is so strong one despairs that the oil industry's interests and the nation's interests as currently constituted can ever be fully aligned to constructively respond to today's exigencies.
It should be known that nationalization is not unique to the American experience. During WW1 the nation's railroads were nationalized and administered by the US Railroad Administration. After 9/11 the private airport security industry was nationalized and put under the authority of the Transportation Security Administration.
Though most of us do not welcome more Government involvement in our daily lives other than on important issues of national security, as we were reminded only yesterday (bin Laden's radio address), we are at war!