Oil and Efficiency Myths

Everything Americans do requires transportation because our individualized homes, like our jobs and shopping locations, are all considerable distances from one another except in our largest, densest cities.  The private automobile rules.  Everything we buy in a store got there by truck.  Two-thirds of US oil consumption goes for transportation, most of that for private automobiles.  Oil and gasoline prices are key components of our national and personal financial situations much as the production and consumption of oil and gasoline are key causes of environmental damage as well as unnatural death and injury.  Mass transportation is minimized in the US and usually starved of financial support where it does exist.

This system, while very profitable for certain industries and enterprises, was never “efficient” unless you equate profitability and efficiency, as if profits measured efficiency.  Once you take into account costs not included in corporate accounting, “efficiency” quickly vanishes.  Profits are positive for many corporations involved in transportation directly or indirectly, because they do not have to count the costs of death and injury to tens of thousands of families affected by car accidents every year.  Even the insurance companies count only what they have to pay for those accidents, which is far different from their lifelong costs to those involved.  Corporations don’t begin to measure, let alone count, all the costs of polluted air, water, and ground.  No one factors in the cost of expensive wars such as Iraq undertaken in part to secure the desperately needed oil.

Partly such costs are impossible to measure, since they affect so many people in so many ways and so far into an unknowable future.  But they are very real costs.  They make the usual claims about the “efficiency” of the private-automobile-based US transportation system and economy at best tragic jokes.

All this comes home more sharply to the American people these days.  Crude oil prices are pushing toward $100 per barrel and average regular gasoline prices toward $3.00 per gallon.  In the years 2005, 2006, and 2007, the average increase in all consumer prices other than energy was around 2.5 per cent per year, while over the same time the average annual increase in oil prices was over 12 per cent (5 times as fast) and the average annual increase in gasoline prices was over 10 per cent.  In simplest terms, oil and gas prices are now draining money out of US consumers.  They have less to spend on everything else.  And their reduced spending means that those consumers are now driving the US economy downward toward recession.

The rising oil prices also affect us by altering the international political scene, giving nations like Saudi Arabia, Venezuela, and Russia, among others, the freedom and resources to pursue their interests far more aggressively than would otherwise be the case.  Rising oil prices elsewhere fuel virtual civil wars (for example, in Nigeria and Iraq) that affect us all in many ways.  Rising oil prices and their political consequences are yet other uncounted costs of the US dependence on oil.

And make no mistake, the US dependence on oil is key to what happens in the world oil market, including what happens to oil prices. With our 2.4 per cent of the world’s people, the US consumes about 25 per cent of the world’s oil.  And 60 per cent of what we consume comes from elsewhere.  The US uses 2.9 gallons of oil per day per person; the global average is 0.5 gallons; and in the rest of the industrialized world, the usage is 1.3 gallons per day.  The US shapes the world oil market more than any other country does.

Other nations’ reliance on mass transportation systems is the main reason they use so much less oil per person.  The “efficiency” of a US transportation system based on private individual vehicles has produced its extraordinary level of dependency on oil and on the world oil market.  So of course the war in Iraq has “something to do with oil.”

The US economy was built upon and around the private automobile mode of transportation.  The new suburban reconfiguration of our population’s residential location after World War 2 enabled a housing boom, a shopping revolution, a vast infrastructure investment program built around road systems, and so on.  The corporations profiting from all that spending successfully blocked and undercut all alternative modes of transportation or home-building or community construction ever since.  They pressed for (bought) government policies to the same ends.

The entire system now dependent on oil requires a systematic response if the immense costs and risks of oil dependency are to be overcome.  No small, piecemeal solutions will work.  None of those so far tried by politicians eager to appear focused on the problem have worked.  So the situation has kept deteriorating (except, of course, for those profiting from it all).

But perhaps now the situation will change.  Because finally corporate America is getting worried (at least those parts hurt by the oil situation).  The largest single employer in the US, WalMart, has been blaming its poor sales records in several recent quarters on the problem that its shoppers spent so much on oil and gas that they had to reduce expenditures at the mall.  Perhaps the whole retail industry will go to work, round up other corporate allies, and demand concessions from those corporations profiting from the oil dependency.  Maybe such a falling out among corporations can do what a disorganized and demoralized mass population could not.

But then a depressing prospect likely opens up yet again.  The “solution” that emerges from struggles among private corporate enterprises will likely once again accommodate their profit concerns at the expense of the mass population that is not consulted by, let alone participating in, and still less controlling what the “solution” is to be.  So it was before and so it will be again unless and until a mass movement arises to demand and obtain real democratic participation and control over solving the mess left by “efficient private enterprise.”

Rick Wolff Rick Wolff is Professor of Economics at University of Massachusetts at Amherst. He is the author of many books and articles, including (with Stephen Resnick) Class Theory and History: Capitalism and Communism in the U.S.S.R. (Routledge, 2002) and (with Stephen Resnick) New Departures in Marxian Theory (Routledge, 2006).

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