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The news of the latest profits gusher reached the White House just as Carter was sending Congress his proposal for the windfall tax, and he seized the opportunity to make yet another appeal for passage, saying that the industry is "already awash" with profits. The occasionally populist President shows a deep distrust of large oil companies, and they are perfect targets for a bit of demagoguery because much of the public dislikes them too. Carter's verbal overkill is also intended to deflect public fury from the White House when gasoline prices, which are already rising sharply, go up even more as a result of decontrol.
The attacks are only fanning suspicions and dividing the nation instead of providing sober answers to the questions that bedevil the public. Among them:
Are the companies creating a phony shortage? No. The crisis is real. World supplies are limited, and the present squeeze has been caused by cutbacks that began in Iran last autumn and have spread to other producing countries.
Are the companies hoarding gasoline to raise the price? No. They are rebuilding their inventories, which they had to draw down sharply in recent months in order to supply customers. Companies are also shifting production from gasoline to heating oil so as to build up stocks for next winter. Even Carter last week admitted that this is necessary, and he warned that the U.S. faces gasoline shortages this summer and fall and a worse pinch next year.
Are the companies earning excesisive profits? Not really. True, they take advantage of overly generous tax credits on their foreign earnings.
What is more, their profits rise automatically whenever prices are kicked up by OPEC. With all that, oil firms last year earned only 4.5% on their revenues, vs. 5.25% earned by all U.S. industry.
In fact, Big Oil is hardly the voracious, devouring money muncher that the White House contends. That distinction belongs to OPEC, which provides the world with half its daily petro-ration and, by controlling the supply, fixes the price. Having hiked the base price 14.5% since January, the cartel has lately tacked on expensive premiums and surcharges and now threatens price increases in June. The rises are a major reason why inflation hit 13% in this year's first quarter.
Since 1973, as the price of the cartel's oil has jumped from $2.41 per bbl. to $14.55, an incredible $550 billion has cascaded into OPEC coffers. The cartel's leaders, many of whom head backward and unstable regimes, have been propelled to the forefront of world economic, financial and strategic affairs. Variously smooth and snappish, OPEC'S chiefs contend that they are merely embellishing the rules of the game as taught by the oil majors. From the moment that John D. Rockefeller organized the infant U.S. petroleum industry into a producers' cartel to maintain stable and profitable prices, companies have employed one device after another to prevent price-disrupting swings between glut and shortage.
Now, OPEC is trying to carry the concept of price fixing to its extreme limits. Reports TIME Correspondent Dean Brelis from the Middle East: "The