Profitable PR Painfully Pumped
Expanded from the 9-25-2005 Daily Sparks (Nev.) Tribune
Last week, the head of Dubya's Federal Trade Commission gave her fellow government officials some sage advice on how to address our worsening energy crisis: Federal government should do nothing, according to Deborah Platt Majoras, plucked by the Texofascists from the anti-trust division of a juice Washington law firm.
This is understandable in a society conditioned by 100 years and billions in corporate propaganda to view the free market as God. 
That deity is only worthy of worship if the venerated market is free of manipulation. Ours is not.
We are being softened up to expect a huge spike in the price of natural gas this winter. The price of natural gas has nothing to do with the cost of production. The industry has manipulated government for so many decades that even the best energy economists chuckle at the madness of which they are expert.
DAVID S. SCHWARTZ, Ph.D.
I worked side by side with one of the best. David S. Schwartz, Ph.D., can be rightfully termed the grandfather of Nevada's consumer advocate office. His testimony before the 1981 legislative session torpedoed a very flawed plan brought forward by soon-to-be-defrocked Republican Gov. Robert List. Then, as now, consumers were screaming about skyrocketing energy prices.
Local teacher Randolph Townsend, myself and my wife were recommended to a seminar in the Bay Area. Turned out our teacher was Dave Schwartz, one the best natural gas economists in the country.
Dr. Schwartz took us through the Kafkaesque labyrinth of modern natural gas pricing. New gas. Old gas. Shallow gas. Deep gas. All labels for the same damned thing, but all priced according to a system devised by the devil himself with the full cooperation of state and local governments. And that was back before Ronald Reagan came to power and fanned the flames of deregulation, a euphemism for rape and pillage. (Can you say "Enron?")
Some regulated gas prices were as easy to raise as changing the date on the tank holding the stuff.
I had many conversations with Dr. Schwartz as we traveled Nevada in 1980 and 1981.
We unsuccessfully tried to convince Elko to buy out the local power company when it was for sale. Sierra Pacific Power executives beat us by hosting parties and steak fries for local officials. I got called a socialist by an Elko County commissioner. (And I've never let now-Assemblyman John Carpenter, R-Elko, forget it.)
We tried to convince the Sparks City Council not to give SPP a 50-year franchise. Had they gone with 25 years, today's council would have clout over the power company with a franchise up for renewal.
Schwartz (now retired to his organic farm in W. Virginia), warned darkly of America's entering an age of mature capitalism which stifles innovation. Rather than come up with something new, companies were becoming increasingly free to buy out the innovative small entrepreneur. Therein lay the seeds of the broad framework of how a few got rich with few of the benefits trickling down.
Then came Reagan and its been open season on consumers ever since.
The major oil companies long ago figured out how to drive independent retailers out of business or into becoming branded outlets. I have written reams about it for a decade. (The entire archive is available at Barbwire.info.)
If Dave Schwartz watched C-SPAN last week, he would have enjoyed a dark laugh. Sen. Ted Stevens, R-Alaska, convened a hearing of the U.S. Senate Committee on Commerce, Science and Transportation. A representative of Public Citizen noted that the Dubya years have brought 2,600 federally approved mergers in the oil industry, especially in refining. Tyson Slocum further added that Ms. Majoras' FTC has no power over a company which unilaterally witholds its products.
The big boys can conspire without conspiring. As I have written so many times, the energy industry resembles the mind-reading twins of Alexandre Dumas' "The Corsican Brothers." They never have to talk to each other to know their brothers' thoughts. Slocum noted that oil and gas futures traders now "game" the system just as Enron did with electricity a couple of years ago. (His testimony will be linked to the expanded web edition of this column at Barbwire.info.) 
The bottom line: We are victims of an increasingly rigged game with the corporate foxes in charge of the hen house. Consumer boycotts dont help. As Dr. Schwartz noted so long ago, the consumer has little elasticity of demand. You need a certain minimum amount of gas to heat your house, warm your water, fuel your ride to work. Energy and its appliances are necessities in an industrialized society.
Supply and demand is just a PR veneer. "The only reason that traders are willing to pay those prices for crude oil is because they believe that individuals are willing to purchase fuels refined from crude at prices that will enable those original purchases to be profitable," conservative economist William Anderson recently wrote.  Translation: The suckers have to pay whatever the traffic will bear.
As Schwartz noted so long ago, the price has nothing to do with the actual cost of production. The system is a game and we are the losers.
People will die this winter as a result and no government will come to our assistance and risk alienating the false God of the mythical free market.
PERKS OF READERSHIP. Those who monitor the breaking news bulletin board at NevadaLabor.com have known since last week that far from striking out, Assembly Speaker Richard Perkins, D-Henderson, may have thrown a changeup with his recent withdrawal from the gubernatorial race.
The latest hot rumor: Perkins will challenge sophomore Republican congresscritter Jon Porter for the district 3 seat, the largest component of which is Henderson.
Perkins will be the guest of honor on Sam Shad's Nevada Newsmakers on KRNV TV-4 this Tuesday at 12:30 p.m. Would Mr. Speaker be traveling all the way north to talk to Shad about what might have been? I sniff major announcement.
I'll join Mr. Shad's pundit panel on Wednesday and will glory in my prescience or bring a jar of Tums, the better to down some seriously well-done crow. The full statewide rerun schedule will be linked to this piece at Barbwire.info.
Be well. Raise hell.
1. BARBWIRE: Labor Day '94: People vs. corporate con job, 9-4-94
Chilling forecasts from Alex Carey
BARBWIRE: The Nevada Republican Party Becomes Communist, 3-30-97
A prescient Plato on the dangers of oligarchy
The Orwell Diversion by Alex Carey
ORDER "Taking the Risk Out of Democracy"
Corporate Propaganda versus Freedom and Liberty
By Alex Carey
Edited by Andrew Lohrey
Foreword by Noam Chomsky
University of Illinois Press
SEE ALSO: Lapham, Lewis H.; Tentacles of Rage: The Republican Propaganda Mill, A Brief History; Harper's Magazine cover article; September, 2004, page 32.
By one conservative estimate, the corporate right has spent about $3 billion over the past three decades manufacturing public opinion to suit big business goals. Lapham's number covered the early 1970's to the present day. Alex Carey noted that by 1948, anti- New Deal corporate propaganda expenditures had already reached $100 million per year, not adjusted for inflation, for advertising alone. (Carey, ibid; page 79)
Adjusted for inflation, that 1948 $100 million becomes $801,659,751.04 in 2005 dollars.
2. " Skyrocketing Gasoline Prices and Record Oil Company Profits: No Coincidence"; testimony of Public Citizen Energy Program Research Director Tyson Slocum before the United States Senate Committee on Commerce, Science and Transportation, Sept. 21, 2005.
See also: "Consumer Group Says Corporate Mergers Are Partly to Blame for Price-Gouging of Consumers at the Pump"; Public Citizen press release regarding Slocum's testimony, 9-21-2005.
3. "How To Create A Shortage" by William Anderson, an adjunct scholar of the Mises Institute who teaches economics at Frostburg State University.
The above represents a delicious high irony. For the most part, it's a trite crypto-fascist screed about why no one should screw with the perfection to be achieved by letting the free market work its will upon your life and virgin daughters. The staff of the corporate conservative think tank which forwarded the article apparently never stopped to think that the paragraph quoted above torpedoes the whole idea that our so-called free market works.
Liberated Iraq was designed by Dubya's neoconmen as a Petri dish demonstration of uninhibited free market capitalism. Shorn of all nefarious government regulation, private capital was supposed to fill the vacuum and turn that Lawrence of Arabia-created Frankenstein of a country into paradise on earth. Saddam Hussein's ban on labor unions was the ONLY law which U.S. overlord Paul Bremer kept on the books after our military conquest. Even without pesky protections for women, minorities, children, workers or the environment, Valhalla on the Euphrates has somehow failed to materialize at least if we are to believe the damnable liberal media.
"(T)he value of wholesale gasoline is determined by the value of what people are willing to pay at the pump," Anderson correctly states, apparently without realizing what he's really asserted.
An everyday example will bring this point into better focus. Hardcore used car sales crews are taught to use the customer's ignorance against him. When asked about the value of his trade-in or the price of a car which catches his fancy, the system-house auto hawker is instructed to answer the customer's question with a question: "What do you think it's worth?" Any greenhorn salesman who actually quotes a price without a fight is usually fired outright as not a team player.
The idea is to get the customer to "wire himself." His ego is likely to let him assign a $4,999 price to a $1,999 used car. If that applies to his trade-in, the customer will quickly be humiliated for his ignorance. Such ego-damage softens him up for the kill. If the sucker assigns the hoped-for inflated value to a freshly-painted wreck, the dealership will then gladly negotiate a hard-fought compromise and agree to sell the iron for $3,999. Such a deal and the mark leaves smugly thinking that he's driven a helluva hard bargain.
Prof. Anderson is saying the same thing about gasoline pricing. It's not $2.99 or $3.99 a gallon, the real price is whatever it's worth to desperate little ole you. You've got to have it to get to work or the doctor. You can waste gas shopping to save perhaps a penny a gallon, but you're playing in a market so controlled by the major refiners that choice, like voting, is an illusion. Shell or ARCO? Paper or plastic?
Prices of gasoline, electricity, natural gas or automobiles have little grounding in reality when all are based on the false proposition of "what's it worth to ya?" All the big boys say that retail pricing represents costs plus a small profit in a competitive market. Where energy is concerned, competition is a carefully created PR illusion.
Last week, the boss of United Airlines called for complete deregulation as the way to correct the problems of an industry dropping like flies into bankruptcy court. On Sept. 12, 2001, these guys started forming a strategy to lobby $15 billion in corporate welfare from the taxpayers. They made the score and still want more. It's all a shuck.
Such a system of selling illusions is perfect for the inhuman corporation which finds it impossible to define the upper range of acceptable profit. There is never enough. BigOil is currently more awash in cash than Texas and Louisiana are awash in water. Alas and alack, as Public Citizen points out, BigOil's manipulation of supply combined with the gaming of the system by speculators in an unregulated commodities market constitute a license to steal. And a tremendous potential for triggering a new Great Depression.
As my Tribune colleague in columny Travus T. Hipp might say, this winter's going to be a whistling bitch.
Batten down the hatches and button down your wallet.
Be well. Raise hell. AB
...and more ammo
BARBWIRE: We have met the enemy and he is us, 5-29-2005
BARBWIRE: Payback Time, 8-7-2005
BARBWIRE: Getting Focused Gas & cable consumer con jobs, 8-14-2005
BARBWIRE: Deadly Spin in the oil slicks of New Orleans, 9-4-2005
BARBWIRE: Sunday of Perpetual Sorrows, 9-11-2005
BARBWIRE: Amoral moralists pontificate as parishes perish, 9-18-2005
Barbwire Oilogopoly Archive
I've been telling you so for 10 freakin' years
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Andrew Barbano is a 36-year Nevadan and editor of NevadaLabor.com. Barbwire by Barbano has originated in the Daily Sparks (Nev.) Tribune since 1988.
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