Contextual Content

From Standard Oil to Big Oil

In the first part of this three-part interview, Antonia Juhasz speaks to Sharmini Peries on writing her most recent book, The Tyranny of Oil: The World’s Most Powerful Industry, and What We Must Do To Stop It. She speaks on the breakup of Standard Oil in the thirty four companies in the first half of the 20th century, and its later revival thanks to deregulation into what is known today as Big Oil. These companies, including ExxonMobile, Chevron, ConocoPhillips, Shell, and BP, have a major control over U.S. and global policies, she argues. In the following parts of this interview, Juhasz speaks on Obama’s plan for energy independence and the effects of oil extraction on the world.

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From Standard Oil to Big Oil

SHARMINI PERIES, TRNN: Welcome back to Part 2 of our interview with Antonia Juhasz, the author of Tyranny of Oil. You were inspired to write this book because of Ida Tarbell.

ANTONIA JUHASZ, AUTHOR: Yes.

PERIES: And she wrote the very famous, classic book on the Standard Oil Company and John D. Rockefeller. And essentially it was investigative work that took him down, along with his company. So what is it about her that inspired you?

JUHASZ: Well, what inspired me was, actually, she was a part of a mass people’s movement in the United States that had organized against the political influence, primarily, being exercised by Standard Oil, the largest oil corporation in the world, a monopoly of its time. The deep concern of the American public was over the political influence being exercised by this company over their government. And what Ida Tarbell did was help provide the necessary information, the research, sort of tied a lot of pieces together, and then shone a bright spotlight on a problem that people had been organizing on for years that helped sort of tip the scales of activism that led to real policy change. In 1911, Standard Oil was broken up into 34 separate pieces. In addition, this was a period in American history that brought the very first regulations on US corporate activity, and in fact a period of history that is remarkably similar to where we are right now.

PERIES: And what were some of your challenges in writing this book?

JUHASZ: My biggest challenge was definitely trying to penetrate the black hole that is the information around the oil industry. So what I ended up doing was relying as much as possible on things like tax returns, going through the minutiae of the financial reporting of the oil industry, congressional hearings, legal hearings, but probably most importantly one-on-one interviews with the people on the front lines of the struggle with big oil, whether that’s local mayors, national political figures, activists, and people all over the world who are doing the nuts-and-bolts work to expose the workings of this industry and to try and rein in its activity.

PERIES: In both of your books, The Bush Agenda and this one, The Tyranny of Oil, you really expose the big oil corporations and the influence they have on our government, in our markets, in our daily lives. Tell me, in terms of this current political moment, with president-elect Obama and the current market the way it is, how much new thinking is taking place in terms of the new president, his administration, in terms of the oil industry.

JUHASZ: Well, you know, the oil industry spent more money in this election trying to get McCain and Palin into office than they have spent ever on any election since we’ve started keeping records in US history. The previous record had been set in 2000, succeeding in getting Bush and Cheney into office. So this was a very important election for big oil, and essentially big oil lost: they didn’t get their candidates; they didn’t get their Congress; they didn’t get what they were after, even on state-level initiatives. So the American public really spoke quite resoundingly, I mean, particularly given that the rallying cry for this election really became those three words from Governor Palin, "drill, baby, drill."

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GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: The chant is "drill, baby, drill," and that’s what we hear all across this country in our rallies, because people are so hungry for those domestic sources of energy to be tapped into.

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The American public repudiated that agenda and of course saw quite intimately that the oil agenda is linked to war, climate change, the stability of the economy. The first thing to remember is that the recession began not with the housing bubble bursting but when oil reached $100 a barrel at the beginning of the year. That’s when the markets started to get jittery. Then we had the financial collapse when the bubble burst. Now, the role of oil within that is, first of all, we had the role of deregulation. The same deregulation that led to the financial bubble bursting is the same deregulation that allowed the price of oil to do its drastic climb. And that was through the behavior of energy traders working within the oil companies, within the investment banks, working to move the price of oil up, up, and up on deregulated exchanges. We do not know what they were doing, how they were doing it, or who was doing it, because it was taking place on the IntercontinentalExchange [ICE], which is completely unregulated. We do know that oil companies have all been found guilty of manipulation of market prices on the regulated New York Mercantile Exchange, but that is not the place where the price is being set anymore. It’s the deregulated ICE. So I would contend that manipulation must have also been taking place on the ICE, moving the price of oil up, up, up, and up. So then, in the last month, we have the drop to $70. So what’s happening, basically, is we have, you know, markets gone crazy. The whole economy is in a state of disarray. We have energy traders who know that Senator Obama has pledged to close the loophole that is allowing the futures manipulation to be taking place. So there is definitely some running away from that market due to the expectation of changes put in place by Obama. There is also just the unsettling of the market and figuring out where to go. We are also in a global recession, which means that demand is most certainly going to continue to fall. That said, we are also still in a position of intense political power resting within the hands of big oil, we are still in a demand-and-supply situation with incredibly tight markets, and I think the only reasonable expectation, unless we fundamentally change policy, is that the price of oil is most certainly going to go up again, as is the price of gasoline, as is home heating.

PERIES: Besides closing this particular loophole you’re talking about, what does a rational, regulated oil policy look like?

JUHASZ: I think one of the things we really have to look at, given what’s happened, particularly over the last two years, is whether it even makes sense for crude oil and gasoline to be traded on futures markets. These are resources that are so crucial to the global economy, so crucial to the entire economic foundation of nations—. I mean, let’s recall it was the last time that oil went to $100 a barrel in 1981 that led to the last major global recession, from which developing countries then became deeply entwined within the policies of the World Bank. The International Monetary Fund suffered from massive debt we’re only beginning to come out of, when what happened? Oil went to $100 a barrel again, and now again we have a fundamental global recession. We have to look at this resource and how it’s being treated, who was capturing the profits and the wealth from this resource, who was making decisions over the price of this resource as we move forward, and I think those are the questions that need to be asked.

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Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.