The United States is in a recession and depends on foreigners to fuel our country. Oil companies are taking advantage of the power they have over gas prices and the economy is at one of the lowest points in all of our history. It can be seen that the way things are going now that change needs to occur for America to get back on its feet. Drastic changes will need to happen if we are going to continue to enjoy living in a very advanced and prominent country. By developing proper offshore drilling techniques, and alternate energy, America could eliminate debt and lessen dependence on foreign oil.
Recently, President Bush traveled to the Middle East to observe the war in Iraq, the situation in Israel, and talk to the Saudi’s about oil prices. In a quotation from a CNN article, Mr. Bush exclaimed (26): "Oil prices are very high, which is tough on our economy. I would hope, as OPEC considers different production levels, that they understand that if ... one of their biggest consumers' economy suffers, it will mean less purchases, less gas and oil sold.” This bold statement by the president shows how important control of oil in the Middle East is. However, only 17% of oil consumed in the U.S. comes from the Persian Gulf states. The question then becomes: why is the U.S. so keen on having sway over countries with oil in the Middle East?
The world’s first billionaire, John D. Rockefeller Sr. held ninety percent of the world’s oil refineries, ninety percent of the marketing of oil, and a third of all the oil wells. Working methodically and secretly, he did more than transform a single industry. When he formed his feared monopoly, Standard Oil, in 1870 he changed forever the way America did business. Because of the ruthless war he waged to crush his competitors, Rockefeller was to many Americans the embodiment of an unjust and cruel economic system. Yet he lived a quiet and virtuous life.
For the past century, the United States has been regarded as the greatest hegemonic power in the world. The U.S. played the most important role in the advancement of mankind from social, political, scientific, military, and economic standpoint. Unfortunately, today this is no longer true. Since the 1980’s the U.S. has been on a gradual decline. The introduction and implementation of trickle down economics, otherwise known as “Reaganomics,” has contributed greatly to the systemic dismantling of the socioeconomic structure that made America great.
The United States hit peak oil in about 1970, while the world hit peak oil in about the 2000s. The term “peak oil” does not mean we are running out of oil, it simply means we are running out of cheap oil. The alternatives to using oil are a number of things, each with their pros and cons. Coal, Nuclear, Hydrogen, Biofuels, Wind and Solar energy are all sources of energy that can and are used to slow down the use of our precious oil. With that said, to produce the equivalent amount of the energy provided by oil in one year (33 billion barrels of oil) it would take: 200 Three Gorges Dams, 2,600 Nuclear Power Plants, 5,200 Coal Fired Plants, 1,642,500 Wind Turbines and 4,562,500,000 Solar Panels.
In the 1870’s, J. D. Rockefeller’s Standard Oil Company was established as a monopoly in the petroleum refining industry in the United States. How he managed to achieve this has always been an economic puzzle because the refining industry, at that time, had many small firms. Moreover, there were minimal barriers to entry into the industry. By 1879, Rockefeller was in control of more than 90 percent of the US’s refining capacity and “maintained a dominant share of refining, in spite of the fact that entry into refining remained easy” (Granitz and Klein 1996, p. 2). Over time, there have been many efforts to explain the Company’s growth; the most sophisticated economic discussion of the monopoly creation is by Elizabeth Granitz and Benjamin Klein in their 1996 article.
OPEC, started by the major oil producing countries in the Middle East, was designed to give price control to the oil producers, instead of the oil manufacturers. Formed in 1960, OPEC was only a middleman for 10 years, but in the 1970Õs, they found the right time to drive up the price of gas. One viewpoint can say it was about time that we started paying these countries for what they were up to that point, "giving us," but from the other standpoint, OPEC is no more than a cartel and monopoly. A cartel is two or more parties, the oil producing countries, hurting an innocent third party, oil consumers. OPEC was created to hurt the oil manufacturers who were taking advantage of the oil producers, but unfortunately the one that got hurt from the agreement are the oil selling stations and us, the consumer.
Iraq used to be a prosperous country. Oil was the main source of income for the area. During the Iran-Iraq War (Gulf War 1), which was from September 1980 to August 1988, Iraq went from being a wealthy country to a very poor country, nearly over night. Hussein had used all energy available in that war, and he came out of it losing over 1/3 of the entire male population of Iraq (Allman 61). Saddam feels that is actions were justified because he believes the Iran-Iraq war was a conspiracy by the US, Britain, and Israel to undermine Iraq (Kondrache 11).
It's the world's biggest retail corporation and America's largest private employer; Sam Robson Walton, a member of the ruling family, is one of the richest people on earth. Wal-Mart and the Waltons got to the top the old-fashioned way: by roughing people up. Their low, low prices are the product of two ruthless commandments: Extract the last penny possible from human toil and squeeze the last dime from its thousands of suppliers, who are left with no profit margin unless they adopt the Wal-Mart model of using nonunion labor and shipping production to low-wage hellholes abroad." (The Nation, March 4th 2002 www.thenation.com/doc.mhtml?i=20020304&s=hightower). Wal-Mart products are not less expensive due to virtuosity.
He also expressed that his worst accomplishment was that he let the national debt rise too high. Letting it go from $997 billion to $2.85 trillion; the US was known as the international creditor, now becoming the largest debtor. I think these three references have similarity because they all seem to express bad ideas that surfaced during the 1980's. Having even the slightest amount of growth, I believe Reaganomics had good intentions behind it and that Mr. Reagan did everything he could to help the US economy; even if it resulted in more debt.