The tipping point for big oil

For the past thirty years the rules for the global economy have been steadily and consistently changed to favour big corporations. GATT, the WTO, NAFTA, and the SPP – are all agreements that lower the barriers and costs of trade, making it easier for corporations to move capital to countries which offer the highest returns.

At the same time, these agreements have also made it harder for governments to regulate corporate behaviour.

During those thirty years the richest one percent have gotten immensely richer while the income of the poor and middle classes has stagnated, and the middle class itself has shrunk as a result of jobs moving south to Mexico and east to China.

Meanwhile, rising global economic growth has caused demand for oil to outstrip supply and the price of oil has risen to almost one hundred dollars a barrel. Exxon, the world's largest corporation, is making the largest profits in history. Now the public is wanting a slice of that pie.

At the same time as fossil fuel companies are making record profits the spectre of global warming has called into question the very idea of free unregulated markets in energy. We may be reaching a tipping point where global warming becomes an unstoppable runaway train. But what I am talking about is a different kind of tipping point – one that tips public opinion towards disapproval of the way these corporations are doing business.

Yesterday I saw an interview on CTV about the fuss over Alberta raising its oil royalties. Craig Oliver was interviewing big shot American financial adviser Dennis Gartman, author of The Gartman Letter. Gartman was all over Alberta premier, Ed Stelmach for planning to raise oil royalties a billion and a half per year by 2010.

Gartman had high praise for Saskatchewan for voting out the “far-left” NDP and electing a “right of center” political party. He predicted that oil investors would move money out of Alberta and into Saskatchewan as a result. And last week, Preston Manning, founder of the Reform Party, and longtime friend of the Alberta Oil Industry, questioned Premier Stelmach's competence over the issue.

We should note that Alaska, which has a thriving oil industry and a Republican government, is seriously considering raising taxes on oil extraction. But oil companies have launched a campaign to stop the increase, with TV ads showing ordinary Alaskan working people telling the viewers how tax rises could jeopardize their petroleum industry.

From Dennis Gartman and Preston Manning, to the big oil companies the message is the same: Be afraid, be very afraid. If you try to syphon off more of big oil's profits, they will pack up and leave.

It is instructive at this point in the story to observe what happened to Hugo Chavez, President of Venezuela, an oil producing country with much of it's oil in tar sands. In 2001 Chavez hiked oil taxes to thirty percent. Needless to say BP and Exxon did not take kindly to this. But Chavez stuck to his guns and eventually the oil companies were forced to go along. There were a number of assassination attempts on Hugo Chavez's life, but this, of course, had nothing to do with any law abiding oil companies with investments in Venezuela

The reaction of the United States was most interesting. In 2002 there was a coup attempt on Chavez which was openly supported by the U.S. government. But Chavez was prepared for the coup and it failed. We can get an inkling of the real attitude of the American government toward the Chavez government from the TV commentary of Pat Robertson, fundamentalist media tycoon and long standing friend of the Bush family. In August 2005 Robertson had this to say:

"Hugo Chavez thinks we're trying to assassinate him. I think we really ought to go ahead and do it. It's a whole lot cheaper than starting a war and I don't think any oil shipments would stop. This is a dangerous enemy to our South controlling a huge pool of oil that could hurt us very badly....It's a whole lot easier to have some of the covert operatives do the job and then get it over with."

Luckily we in Canada lie North of most of the United States so we couldn't be that dangerous enemy that lies to the South. And besides, if we raise taxes on oil extraction the oil companies will just move somewhere else. Why should the oil companies pay for the huge sections of boreal forest they are destroying and all the fresh water that they are permanently sequestering from the rest of the earth when they are giving us jobs and supplying the United States with badly needed energy?

Premier Stelmach should be kissing big oil's butt for all the things they have done for Alberta's Economy. Instead he is raising oil taxes. That ungrateful SOB. Perhaps big oil can do Alberta a favour by ensuring that he loses the next provincial election. It's a lot cheaper than a war, isn't it?