AFP AUDIO INTERVIEW
Antonia Juhasz, one of the nation’s leading oil and energy experts is a former congressional aide on Capitol Hill and an investigative journalist, as well as the author of three books and numerous articles which have appeared in many publications, including The New York Times, the Los Angeles Times, The Nation, The Washington Post, and CNN.com, among many others.
Antonia sat down with Dave Gahary to explain why gasoline prices remain historically high and why there’s no relief in sight, in this informative interview (38:26).
High Prices at the Pump to Remain in Place
• Leading petroleum analyst explains “energy traders” are responsible for permanent spike in prices
By Dave Gahary
One of the nation’s leading oil and energy experts sat down with AMERICAN FREE PRESS to explain why gasoline prices remain historically high and why there’s no relief in sight.
Antonia Juhasz, a former congressional aide on Capitol Hill, is an investigative journalist whose focus is on oil and energy issues, and the author of three books on the subject as well as numerous articles, which have appeared in many publications, including The New York Times, the Los Angeles Times, The Nation, The Washington Post, and CNN.com, among many others.
In preparation for the exclusive interview, this writer read The Tyranny of Oil, Ms. Juhasz’s second book, named after those same words delivered by then-Senator Barack H. Obama during a presidential campaign speech.
AFP asked if President Obama has delivered on his promise to reign in the oil industry.
Although the “Bush administration was, hands down, the most oil-influenced administration in the history of the United States,” [Obama] “certainly has not ended the tyranny of oil,” she said. “I . . . think he wasn’t intent on making the type of changes that people like myself would have wanted to see happen. This administration…is allowing the largest increase in domestic oil production in many, many, many years, certainly in fracking and offshore production, and those are all very problematic policies.”
Fracking, short for ‘hydraulic fracturing,’ “is the fracturing of rock by a pressurized liquid.” AFP has reported on this dangerous oil-extraction technique, which has many dangerous side effects, the most serious being the direct correlation between the procedure and earthquakes.
The main characters in the quest for oil are known as ‘Big Oil’: ExxonMobil, Shell, BP, Chevron, ConocoPhillips, Valero and Marathon. In fact, John D. Rockefeller’s Standard Oil, founded in 1870, “was the first truly multinational American corporation.”
Big Oil produces approximately 13% of the world’s oil while the Organization of the Petroleum Exporting Countries (OPEC) produces about 40%. Additionally, said Ms. Juhasz, “the dramatic emergence onto the scene of the Chinese…and Russian oil companies . . . have certainly entered into the fold of Big Oil.”
Today’s high oil prices can be traced to the first few days of Ronald Reagan’s presidency, the last few months of Bill Clinton’s, and the legal battles being waged by Big Oil to prevent implementation of the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.
“Deregulation of refineries and gas pricing…that happened under the Reagan Administration,” she explained, “has had the largest impacts on pricing of gasoline and oil consolidation within the industry. The deregulation that began under Reagan also includes the shifting of the pricing of oil onto oil futures markets and once that happened…we really saw pricing of oil shift out of the hands of OPEC and into the hands of futures traders. And that may be one of the more significant of many changes that were begun under the Reagan Administration.”
“A futures contract,” Ms. Juhasz explained, “is a commitment to buy a good in the future for a price set in the present. Bankers and oil companies and hedge funds are betting on . . . which way the prices will go to make money off of the trade…not really an actual willingness to exchange a good at the end of the day. It’s really just about speculating and making money on what direction the price is going to go in the future.”
Two of the main culprits responsible for the misery millions of Americans are experiencing while trying to keep their tanks filled in their homes and their cars, are the husband and wife team of Phil and Wendy Gramm.
William Philip “Phil” Gramm, economist and former Representative and Senator from Texas, was the main sponsor of the Commodity Futures Modernization Act of 2000, which many feel opened the floodgates to all the financial crises that have followed its signing by Bill Clinton in his waning days. Significantly, the Act allowed the creation of unregulated futures exchanges. Gramm joined scandal-wracked Swiss global financial services company UBS AG in 2002 immediately after retiring from the Senate. His wife, Wendy Lee, an economist advocating deregulation of the energy industry, “held several positions in the Reagan Administration, including heading the Commodity Futures Trading Commission from 1988 to 1993,” followed by a position on the board of directors of the bankrupt energy company Enron.
“Through Wendy . . . and Phil Gramm, the trading in oil futures was severely deregulated and the government essentially removed itself from the process of regulating these trades,” explained Juhasz. “But while Enron was brought down, its methods continued, including its energy traders, many of which who went to work for oil companies.”
Through “what’s forever now referred to as the ‘Enron loophole,’ the price of oil went up and up and up and up, because you have this rampant speculation that was feeding on itself and that was creating a false demand. That run-up in the price eventually, I believe, broke the global economy, because we are so hardwired to the price of oil, that this dramatic and really unprecedented run-up in the price of oil [in 2008].”
Ms. Juhasz feels that “one of the reasons why we’ve also stayed . . . in a global recession is that we’ve been stuck at this price of $100 a barrel of oil without any support to get us off of oil as rapidly as the price has risen. So this deregulation is a pretty fundamental and dramatic one and the Gramms are right at the heart of it.”
So why aren’t prices much lower since the available supply of oil far surpasses demand, AFP asked.
“The policies that began during the Bush Administration . . . continued by the Obama Administration, such that we’re producing more domestically of oil and gas than we have in decades; also internationally. The Iraq War opened up an enormous spigot of oil in Iraq. There’s tar sands, there’s offshore production; the globe is booming in oil production. So you’ve got increased production, in many cases reduced demand, including in the United States, and yet increased price and that clearly isn’t how supply and demand is supposed to work. And that is clear evidence of manipulation of price.”
Juhasz revealed in Tyranny that economists and analysts have determined that the price of oil is increased by 20 to 50% because of energy traders, something known as the ‘speculative premium.’
Besides the price manipulation of oil, Juhasz pointed to another area that’s rife with financial chicanery.
“There’s a tremendous amount of concentration and consolidation within the domestic refining and selling of gasoline market that also adds to control the price,” she added. “I certainly believe that there’s manipulation happening at the level of the pricing of gasoline. When the price of gasoline is manipulated and pushed up and people have to pay $4 a gallon and literally choosing between eating breakfast in the morning and driving to work . . . that’s hugely problematic.”
AFP asked what the future holds in store for your average American at the pump.
“I don’t see those prices lessening,” she concluded.
Dave Gahary, a former submariner in the U.S. Navy, is the host of AFP’s ‘Underground Interview’ series.