Gas Pump Rip-Off–Made in Washington

With the price of gasoline rapidly surging, and expected to reach anywhere from $1.70 to $2 per gallon – depending on what part of the US you live in – Americans will soon be grumbling as they wait in long lines for the privilege of getting ripped off, and looking for someone to blame. The oil companies, OPEC, the US government – these are the likely candidates of Americans’ ire, and with good reason.THOSE WERE THE DAYS

The alliance of oil-producing states, known as OPEC, has long been trying to establish itself as a worldwide oil cartel, centered in the Middle East but also including Venezuela and some African nations. Sitting atop the world’s largest reserves of crude oil, these nations have long sought to increase profits and exercise a degree of control over the West by manipulating the oil supply. If OPEC cuts production, prices rise; if they open up the taps, and let the oil flow, prices plummet. But not anymore.


Mexico, a major producer, is not a member of OPEC, and the discipline needed to maintain monopoly prices is not something that is encouraged by the market: if one breaks ranks, prices fall precipitously – and, what’s more, the one to break first reaps the pot of gold, cashing in on inflated prices and ultimately undercutting the cartel. It isn’t a system built to last, not even for a few months: as the discovery of oil reserves in Central Asia, South America, Indonesia, and Alaska increased the supply and sent the price of crude plunging, the myth of the mighty OPEC was no longer enough to throw a scare into the markets. For years now, oil prices have been falling, and the major companies have had to undergo a series of mega-mergers even to stay viable, never mind satisfy the demands of investors for a reasonably large margin of profit.


While OPEC did announce a production cutback this past April, the fact is that, normally, this would not necessarily lead to such a major uptick in prices as we are experiencing. For all of the reasons stated above, OPEC is a toothless tiger, good at growling but with not much of a bite. What, then is the real reason for the outrageous surge in prices; what’s behind the fact that gas is rapidly heading toward $2 per gallon?


To begin with, government regulations and “environmental” safeguards, especially in California, act as government-mandated price supports. And as much as we are told that inflation has for all intents and purpose been abolished – in this the new New Era of the cyber-economy, which is somehow exempt from timeless economic laws – I don’t believe it for a minute. If inflation is a thing of the past, how come the prices of such essential items such as housing, clothing, education, and medical care only seem to go up? But while inflation is undoubtedly a factor, no matter how much the economic gurus assure us that the monster has been slain, it is not the major reason for the sudden pain at the pump.


The silence on this issue is deafening: we are led to believe, by implication, that the market itself is wreaking vengeance on us sinners: we drive too much, when we could help the environment and ourselves if we’d just get out that bike. But come on, now, let’s get serious: there is no real mystery as to the proximate cause of the sudden drop in the supply of oil. The sanctions maintained on Iraq, which are killing 5,000 children a month and have already decimated an entire generation, keep billions of gallons of oil off the market. The last time gasoline prices spiked, in the Spring of 1996, they settled down only after Iraq and the United Nations agreed on an arrangement whereby Iraq would be allowed to sell $2 billion worth of its embargoed oil over a six-month period. That was the signal for the price to slide rapidly downward by several dollars per barrel. At pre-Gulf war levels, Iraq was shipping 3 million barrels per day. The agreement allowed for the sale of about 700,000 barrels a day, but this is sporadic and uncertain, subject to the exigencies of America’s ongoing struggle to bring the present Iraqi government to its knees. No, it isn’t the market that is causing this artificial shortage, it is the most massive and violent form of government intervention imaginable – the US government’s merciless decade-long war on the Iraqi people.


Protesting the economic sanctions that forbid the importation of such “weapons of mass destruction” as paper and pencils, as well as essential food items, Iraq has withheld oil shipments and is arguing within OPEC to curtail production. Iran, Saudi Arabia, and even little Kuwait – whose precious “sovereignty” we fought to defend – have all combined to hike the heretofore sagging price of crude, although they may consider opening the spigots just a little wider in due time. Without the armed might of the United States, and the persuasive powers of successive American Presidents – who have somehow managed to convince the American people that our fate is tied to that of the Arab sheiks and princelings – the decadent and tottering monarchies of the Middle East would long since have gone the way of the Iranian Shah. Why are we defending a bunch of extortionists, who yelp for US intervention whenever they get in trouble, and then turn around and rob us at the gas pump the first chance they get?


But why is the US government putting up with this state of affairs? The obvious question to ask is: who benefits? The biggest and most immediate beneficiaries of the price hike are the oil companies, who stand to reap mega-profits as the cost of their product rises over the summer, just as many people are going on vacation. During a televised interview with reporter Lesley Stahl of “60 Minutes,” [May 12, 1996], Secretary of State Madeleine Albright was asked:

“We have heard that a half million children have died [as a result of sanctions]. I mean, that’s more children than died in Hiroshima. And – and you know, is the price worth it?”

Madeleine Albright: “I think this is a very hard choice, but the price – we think the price is worth it.”


Certainly, from the point of view of the oil companies, it is “worth it.” But this is just gravy: the real meat of the matter is how the sudden oil shortage will impact US foreign policy – and increase the chances of a major war breaking out in the next few years by at least a factor of ten. The machinery is already in place: all that remains now is for the “crisis” to be suddenly ignited. An explosion is sure to follow.


In the process of “reinventing government,” Bill Clinton and Al Gore created a special office deep in the bowels of the federal bureaucracy, a “Special Advisor to the State Department and the White House for Caspian Basin Energy.” In a frankly mercantilist policy, the purpose of this office has been, as Ambassador Richard Morningstar put it, “enhancing commercial opportunities for U.S. and other companies.” In terms of action, this means “bolstering the energy security of the US and our allies and the energy independence of the Caspian region by ensuring the free flow of oil and gas to the world marketplace.” Both John McCain and George W. Bush have endorsed this Clintonian plan, fueled by campaign contributions from the Roger Tamrazes of this world directly into the coffers of the Democratic National Committee, and if anything want to accelerate what is essentially a scheme to seize the oil fields of central Asia on behalf of American and European oil companies. Significantly, Morningstar, the first person to hold this newly-created Ministry of Caspian Oil, has since gone on to become Ambassador to the European Union, the junior partner in the plunder. As the phony, government-created oil “shortage” reaches critical mass, the rationale that the US must intervene in the Caucasus – or, perhaps, in Colombia – to protect vital oil supplies begins to make a twisted kind of sense to the outraged American consumer. As an added rationale to go after Saddam Hussein, and up the ante in the ceaseless war against Iraq, the contrived shortage will stoke the fiery rhetoric of the War Party, and play a major role in the next foreign policy “crisis.”


With major oil companies pouring millions into the campaign chests of both major party candidates, another war for oil is almost certain if and when one of them winds up in the Oval Office. The only question is where, and under what pretext, will it break out? In a White House where the Lincoln Bedroom was rented out like a Motel 6, by the hour, and with an “opposition” party so obviously in the pocket of Big Oil as the Bushian GOP, it seems almost inevitable that we will soon be exporting “democracy” to the steppes of Central Asia and the jungles of South America – and subsidizing oil imports with the blood of our soldiers. Our policy of global intervention benefits the few, while it hurts the many, not only here in America but all over the world, and this is the Achilles heel of the War Party, a weakness that could well prove fatal. It is, of course, the job of this website to continually expose and dramatize that fact, while putting it in context – a task that takes on a heightened sense of urgency with each passing day.

Author: Justin Raimondo

Justin Raimondo passed away on June 27, 2019. He was the co-founder and editorial director of, and was a senior fellow at the Randolph Bourne Institute. He was a contributing editor at The American Conservative, and wrote a monthly column for Chronicles. He was the author of Reclaiming the American Right: The Lost Legacy of the Conservative Movement [Center for Libertarian Studies, 1993; Intercollegiate Studies Institute, 2000], and An Enemy of the State: The Life of Murray N. Rothbard [Prometheus Books, 2000].