Shock Doctrine 101

Gas prices are at an all-time high, oil is over $134 a barrel and steaming towards $200 a barrel and now two very interesting pieces of news from the political world of the oil and gas industry emerge in one week. First, the GOP leadership, manifested by the current President George W. Bush, and the Republican nominee Senator John McCain, make a complete about face on the issue of offshore drilling. Second, after over 30 years in exile, Big Oil finds its way back in to the lucrative business of servicing the gushing Iraqi oil fields.

These separate events, when viewed through a collective lens, offer a perfect example of radical right wing measures being pushed on a populous staggering from the effect of an economic "shock", in what Naomi Klein would describe in detail in her brilliant book "The Shock Doctrine". The most impressive book I have read in quite some time is Naomi Klein's "The Shock Doctrine", and I would highly recommend it to anyone interested in a book on the effects of globalization.

Without giving a complete book review, allow me to give brief insight in to the central premise of "The Shock Doctrine". Klein suggests that extreme right-wing measures such as mass privatization, complete economic deregulation, and the opening of all financial markets to foreign investment, most especially when dealing with the opening of new markets and the expansion of free market capitalism, have always been accompanied by a "shock". The shock may come in the form of a natural disaster, war, or even as an economic shock.

While under the effects of a shock, people are willing to part with freedoms, rights, and public properties, among many others just to bring back a semblance of stability. A perfect example of this phenomenon would be the mass privatization of the New Orleans public schools after Hurricane Katrina. Instead of fixing the publicly owned school system, a for-profit charter school system was created in its place. New Orleans now only has four public schools remaining, yet the taxpayers would not be able to reflect such in their tax bill, since their tax dollars now go to fund the charter schools, something they as citizens have zero stake in. For reference Jackson Mississippi has over 60 public schools in the Jackson Public School District. Certainly the people of New Orleans would have never allowed this grab of public property for private gain had they not been under the stress of as a severe a shock we have seen in the U.S. in modern times.

The rapid rise of the price of oil over the the last few years has created an economic shock now being manifested in the pocketbooks of everyday Americans as well as the rising costs of operation for industry nationwide. People are faced with making hard decisions as the size of their fuel budgets have now risen to levels comparable to their housing and food budgets. Industries are facing the stress of the rising costs of production and distribution.

Americans are notorious procrastinators. Even though many pointy headed intellectuals (Carter, Gore to name a pair) have insisted that we are on borrowed time as an oil-based economy, we have for the most part ignored their advice and continued to enjoy the benefits of artificially low gas prices. Now in a brief seven year period we have seen the price of gas nearly triple. Real economic pain with its accompanying fear of worse pain, is the "shock" now being collectively felt across the country.

Big Oil has made an all out media campaign calling for the immediate opening of ANWR and to lift the moratorium on offshore drilling. The right wing political machine sees a golden opportunity for a political two-for-one. One, they get to make political points with the public by offering a "solution" to the gas price shock, by calling for more drilling. Granted they are counting on an uninformed public, and for a change it looks like the mainstream media is not buying their argument. Two, they get to scratch the backs of one of the most powerful GOP lobbies, Big Oil, and do it under the cover of the "shock".

Some, including our own Haley Barbour, have gone as far as to blame former President Bill Clinton for the current gas prices. Haley is too smart and too well informed to not know that the demand for oil has increased exponentially with the rise of China, Russia, India, and other emerging market based economies. It is not a problem that a small, time consuming increase in supply can adjust, the demand is just growing too fast.

The more people in China trade in their bicycles for automobiles, the higher the demand on oil. What limited resources we have in the United States (3% of the world's supply), does not match with our demand (25% of the world's demand). Besides any free market economist will tell you that the oil gained by Exxon-Mobile or Shell by drilling would go to the global marketplace to be sold at market price. There is no way the shareholders of these oil behemoths are going to allow the sale of oil in the United States at a fraction of market cost just because it was discovered and harvested from the our own soil.

As any right-winger will tell you, the government has no right to interfere with the market. I certainly don't agree with them, but that is certainly their position. So don't be disillusioned by the false prospect of cheap oil just because our oil industries have access to more oil in the U.S. If you truly believe this, I beg you to ask your Republican leaders what they plan to do with this oil that will be owned by Shell, BP and Exxon-Mobile. I doubt anything comes up about protectionism and keeping the profits down by selling cheap at home. The market is their god.

Let us not forget all of our previous discussions on the myths being purported by the right-wing noise machine related to drilling. It will be year 2030 before any real benefits could possibly be felt in the markets due to an increase in supply. Demand is expanding exponentially, so I don't think a modest gain in supply will effect the market more than pennies on a tank of gas. Don't let them fool you, they know this too. But they think you are so distressed about the price of gas that any B.S. story they manufacture around the need for drilling as a panacea to our energy problems, will have you jumping jump in line to support their money grab. Sad, but true.

I thoroughly detailed the thievery going on Iraq by our oil giants of Iraq's most precious resource, its oil. After being shut out of the Iraq market for over 30 years by Saddam Hussein, Big Oil has found the moment they have been waiting for. Like circling vultures, they have descended upon their wounded prey ready to feed. Never mind that the oil belongs to the people of Iraq to profit from, not our oil and gas corporations. While I am not against foreign investment by our energy corporations, I do oppose the plundering of a nation crippled by war. The people of Iraq would never allow this in normal circumstances, and neither would the people of the U.S.

The "shock" of rising gas prices has created the political environment the oil barons have been waiting for to make these outlandish moves. While I do not think Big Oil created the gas "shock", at least not directly with intent, but they are looking to use the pain at the pump felt by regular Americans as a means to push through unpopular legislation and outright thievery overseas. This is "The Shock Doctrine" at its finest.