Oil Prices and Capitalism

The Biden administration is trying to decrease the price of gasoline in the US — or at least they are making a performance of trying to decrease the price. Let’s take a look at how capitalism is making this problem worse and how a liberal (i.e., capitalist) government like the Biden administration is ill-suited to actually fix the problem.

First off, when they release oil from the US strategic oil reserve, where does it go? The oil is purchased by private corporations.

Second, when the Biden administration makes an effort to increase domestic oil production, where would this hypothetical increase in oil go? The oil is extracted by private corporations and becomes their property.

OK, so we have all these private corporations who now have more oil at their disposal. Where do they sell it?

They sell it on the open market. Oil that is released from the US strategic oil reserve can end up anywhere. Oil that is extracted from the geographical US could end up anywhere. So, these Bidenist solutions have a tiny fraction of the impact they could have if US oil stayed in the US. This is capitalists — and a government corrupted by capital — screwing over the people of this nation, which is what they do in every country on earth. But more to the point: The impact of both of these strategies is relatively small since the oil goes on the global market rather than the US market.

But it gets worse. It turns out that oil companies are sitting on huge amounts of oil right now in order to force the price up. If they’re sitting on all this oil already, then how will giving them more oil (in the form of releases from the strategic reserve or more permission to drill) going to solve the problem?

It won’t.

I don’t want to by like a fascist and mislead you about my own position on this, so let me be clear: We need to decrease production of oil in the US — as well as globally. While keeping the oil we do produce in the US is a good idea, the better idea would be to reduce our need for oil with the end goal of eliminating oil production. From my perspective, all these people complaining about how expensive gasoline is right now are getting exactly what they deserve; their failure to support more efficient transportation in the past is the real reason things are hard right now.

Related: Explainer: How the US’s strategic petroleum reserve works (Al Jazeera)