“If We’re at War, President Bush Should Limit Oil Profits”
By Gene C. Gerard
04/18/06 "ICH"
-- -- President Bush frequently compares the war
in Iraq to World War II. While giving the commencement speech at
the U.S. Air Force Academy Mr. Bush noted, “Like the Second
World War, our present conflict began with a ruthless surprise
attack on the United States.” While speaking at a ceremony
commemorating the 60th anniversary of World War II, Mr. Bush
again made comparisons between the two conflicts. He said, “As
we mark this anniversary, we are again a nation at war. Once
again, war came to our shores with a surprise attack that killed
thousands in cold blood.”
While many Americans are dubious about these comparisons,
perhaps we should take the president at his word. Maybe we are
engaged in a global war. If that’s the case, then there is ample
precedent for Mr. Bush to limit oil profits. Americans expect
the president to do something that will lower the cost of
gasoline.
The average national price for a gallon of gasoline last week
was $2.68. This is an increase of 40 percent compared to one
year ago. And the Energy Information Administration predicts
that gasoline prices will rise by another 25 cents per gallon by
the end of the summer.
Oil companies are making huge profits. Exxon Mobil enjoyed the
largest profit of any corporation in American history last year.
Likewise, ConocoPhillips enjoyed a huge increase in profits in
2005. Much of the record profits are attributable to the fact
that these companies bought oil reserves years ago when the
prices were $10 to $25 per barrel. Oil prices are now going for
upwards of $70 per barrel.
The price of gasoline, and many other items, also soared in
World War II. Corporate profits more than doubled between 1939
and 1943. As a result, the federal government sought to lower
prices and limit corporate profits during the war. According to
Martin Hart-Landsberg, an economist at Lewis and Clark College,
“Holding down prices was one of the U.S. government’s important
economic achievements during World War II.” This was
accomplished largely by the Office of Price Administration.
In 1941, President Roosevelt created the Office of Price
Administration (OPA). Congress gave credence to this new
governmental agency by passing the Emergency Price Control Act
in 1942. The director of the OPA was given the authority to
determine the price of a product that he determined to be
“generally fair and equitable.” He also had the authority to sue
corporations and retailers for damages if they violated the
price limits. During the last year of World War II over 71,000
retailers were forced to pay $5.1 million for violating price
limits.
Recent polls have shown that rising gasoline prices are one of
the most pressing issues that the public wants President Bush to
address. Similarly, in 1941 and 1942 polls showed that the
public wanted the government to limit corporate profits and the
prices of many commodities. Consequently, the OPA simply froze
most prices in March 1942. When corporations and retailers
attempted to skirt the OPA, President Roosevelt issued an
executive order in October 1942 creating an Economic
Stabilization Director for the nation.
The director was given the authority to set national prices for
most items. And President Roosevelt made him responsible for
preventing increases that were unnecessary and unfair. The
executive order mandated that the Economic Stabilization
Director’s office “…in fixing, reducing, or increasing prices,
shall determine price ceilings in such a manner that profits are
prevented which in his judgment are unreasonable or exorbitant.”
Today, oil companies would almost certainly complain that these
governmental limitations on profits and prices violate their
rights. Businessmen made the same objections in World War II.
However, the Supreme Court disagreed. In the case of Yakus v.
United States, the Court found in 1944 that the price limits
were constitutional. The court ruled, “There is no principle of
law or provision of the Constitution which precludes Congress
from making criminal the violation of an administration
regulation.”
When the war ended, the OPA and the Economic Stabilization
Director were abolished. Not surprisingly, corporate profits
soared. In the year following the end of World War II, consumer
prices rose 67.4%. Clearly, one of the significant economic
achievements by the Roosevelt administration in World War II was
holding down prices, mainly by governmental controls.
President Bush insists that we are engaged in a global battle
similar to the Second World War. If that’s the case, he should
insist on limiting soaring oil prices. He has both historical
and legal precedents to support this. However, it’s hard to
imagine that he will. Given his close ties to the business
community, and especially the oil industry, it seems likely that
he won’t do much to stop rising gasoline prices.
Gene C. Gerard, taught history, religion, and ethics for 14
years at a number of colleges in the Southwest and is a
contributing author to the forthcoming book Americans at War, by
Greenwood Press. He writes a political blog for the world news
website OrbStandard at
www.orbstandard.com/GGerard
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