Texas tea and democracy

With Americans paying about $3 for a gallon of gasoline, and Exxon Mobil, Chevron and ConocoPhillips doing so well this year, one might wonder why U.S. politicians haven’t taken much action to help Americans cope with the price of gas. A lot of their profits come from our natural resources, so why not take some of those profits and spend them on social programs? It would seem that our government, and the media too, is more concerned with preserving those profits than improving the lives of Americans.

There are other countries, however, that approach things differently. On Monday, Bolivia’s president, Evo Morales, ordered the armed forces to occupy 56 oil and gas installations, fulfilling a campaign promise to nationalize the country’s hydrocarbon resources. The next day, May Day, he announced his terms. Within six months, foreign companies must negotiate contracts that will be more favorable to Bolivia. Until then the Bolivian government will increase the tax and royalty rate the companies pay to 82 percent, up from the 50 percent they had been paying. The Bolivian government also gets a majority stake in 67 energy fields. If foreign companies reject these terms, the government will force them out.

The Financial Times reports that the U.S. government is now concerned about Morales’ “weak commitment to democracy and close relations with Venezuela,” while The New York Times op-ed pages call Morales authoritarian, undemocratic and among the new group of Latin American leftists that make up “the wrong part of the left.” It is strange, then, that with this undemocratic move, Morales, who has an 80 percent approval rating, carried out the wishes of the 95 percent of Bolivians who voted to nationalize their country’s natural gas fields in a 2004 referendum. Assuming that they weren’t voting against their own interest in near-unanimity, the nationalization of their natural resources will be to their benefit. There are over nine million people in Bolivia, and according to the National Institute of Statistics, 67 percent of them live in poverty, making Bolivia South America’s poorest country.

The only thing harmed by the move is the economic interest of the foreign companies – Brazil’s Petrobras, Britain’s BG Group, Spain’s Repsol, France’s Total and the United States’ Exxon Mobil (which has a minority stake in a gas field controlled by Total). The maintenance of an economic system in which foreign companies have the right to profit from countries’ natural resources, including the natural resources of faraway lands, regardless of what the people who live there think about it, might be harmed as well. Perhaps The New York Times, along with every major newspaper and the U.S. government, is more concerned with that right than it is with the welfare of millions of the hemisphere’s poorest people.

This would explain why Exxon Mobil, along with Chevron and ConocoPhillips, has been doing so well this year. Together, those three companies have made $16 billion in profit during the first three months of 2006, an increase of 17 percent from last year. By itself, Exxon Mobil, Condoleezza Rice’s old company, reported first-quarter profits of $8.4 billion, after posting the highest quarterly and annual profits of any U.S. company in history last year, with $10.71 billion in the fourth quarter and $36.13 billion for the year. Wall Street analysts expect the three companies to surpass last year’s combined record of nearly $64 billion in profit.

And, according to The Associated Press, the combined first-quarter revenue of those three companies is $191.5 billion – more than the individual gross domestic products of 189 different countries, including Denmark, Ireland, Chile and Venezuela.

We hear a lot from the media and our government about the free market and its magical powers, as well as the evils of protectionism. But, in reality, protectionism is only evil when others do it. One reason Chevron’s profits are so high is that it bought its rival, Unocal, last year. Chevron was able to buy Unocal because the U.S. government threatened to block its sale to a foreign company. And so Chevron bought its rival for $18 billion, over a higher bid from China’s CNOOC Ltd.

Some countries defend the rights of their people and carry out their demands. Other countries defend the rights and profits of their companies, which they call “the free market,” while ignoring their people’s demands. In the U.S., politicians do the latter, which is called “democracy.”