O'Reilly Guest: Big Oil Should Be Allowed to Gouge Consumers!
Reported by Marie Therese - September 2, 2005
Wonder of wonders! Last night Bill O'Reilly turned his wrath, not on some defenseless liberal, but on Big Oil. He's not happy about the price of gas and he's making sure everyone knows it.
Not only did he devote his entire Talking Points Memo to the question of windfall profits and energy conservation, he also went head-to-head with free-market proponent Jerry Taylor of the Cato Institute.
"America's failure to conserve energy is a disgrace and the Bush administratin has done little to encourage conservation," O'Reilly said. "This country uses 25% of all the world's oil as we hop around in gas-guzzling cars and generally waste energy all day long. We have to stop that."
"There's no question in my mind that OPEC and the oil companies are gouging us simply because they can! So, let's buy less gas. In fact. let's buy no gas on Sundays. The U. S. A. should have a gas-free Sundays campaign between now and Christmas. None of us should buy gas on our day of rest."
"The oil companies and OPEC only make money only if we buy their stuff. if we cut back even 10% on energy buying, they'll get hurt. Let's all do it. If we don't, the national economy will totter and we'll all be poorer. Now, last night Talking Points called for U. S. oil companies to voluntarily give up 20% of their profits in this very tough time by lowering gas prices. This morning Diane Sawyer asked President Bush about my proposal:"
Begin VIDEO CLIP, Diane Sawyer and President George W. Bush, Good Morning America:
SAWYER: "... Some people have said that the oil companies themselves should simply forfeit some of their profits in this time of national crisis. A conservative commentator - a popular one - called last night for 20% reduction in the profit."
BUSH: "Hmm. "
SAWYER: "Do you call on them for this?"
BUSH: "Well, what I'd like to see is corporate America make sure that they contribute to helpin' these victims - that there be an outpouring of contributions to - to - for the relief efforts."
O'REILLY: "The big contribution would be if the oil companies would give up 20% of their profits. They'd still make a gazillion dollars. Obviously the President didn't answer Miss Sawyer's question.
Later in the show he acknowledged to FOX Senior Judicial Analyst, Judge Andrew that "the oil companies don't seem to be givin' us a big break" and wondered out loud if there was anything that could be done. Napolitano basically told him that every state has laws against unfair trade practices, such as price gouging.
[Aside: On August 31st Reuters reported that Georgia Gov. Sonny Perdue of Georgia signed an executive order to punish gasoline sellers who gouge customers.]
O'Reilly asked if President Bush could sign an executive order limiting Big Oil to a profit of 15%. Napolitano said that he would not have the authority to do it. Congress would need to pass legislation giving the President such authority.
NAPOLITANO: "The Congress gave President Nixon the authority to do it in '73 and it was a disaster."
O'Reilly's other guest was Jerry Taylor, Director of Natural Resource Studies for the Cato Institute, a libertarian think tank. In 2003 he co-authored with Peter VanDoren an article for the National Review entitled "Let 'Em Gouge." Needless to say, Taylor argued against any kind of governmental influence on the free market.
TAYLOR: " ... The price for gasoline today is being set by supply and demand. It's not being set by acquisition costs. Because gasoline is so scarce right now and demand is now so high because people are panicking about future supply, you've got a situation in which gasoline has to get rationed. There's not enough to go around. You can ration it by price, based on willingness to pay, or you can ration it by how long you want to stand in line. Or you could ration it by giving out lotto tickets or something like that."
O'REILLY: "Yeah, but if you do that, poor and working class people get punished. Now I disagree with you in the sense that I don't think that this is a free market situation. Because of an act of God - the storm - it's cut the refining capacity and the distribution capacity drastically, so I say this - and you tell me where I'm wrong here. ... All U. S. oil companies should voluntarily say: We are going to lower our prices 20% - cut 20% off our profit margin - for the good of the country. What would be wrong with that?
TAYLOR: 1973 would be wrong with that because when we last imposed price controls ...
O'REILLY (overtalks): No! This - it's not an imposition!
TAYLOR: ... on gasoline while it was scarce ...
TAYLOR: ... people had divi ...
TAYLOR: Well, why don't you ....
TAYLOR: If they - if they were to actually price the commodity below the market cost, whether it was for voluntary reasons or they were afraid of Congress acting or whatnot, we would see people ...
O'REILLY: Jerry! You're not hearin' me here!
TAYLOR: We would see the pumps run dry.
O'REILLY (angry): You're not hearin' me here! 20% reduction in profit! Profit!! OK?
TAYLOR: They're charging ...
O'REILLY: they're makin' - all of these oil companies are makin' record profits now - all of 'em!!
TAYLOR: Yes! Yes.
O'REILLY (louder): Bring it down 20%!! What's wrong with that for the good of the country?!!
TAYLOR: That's a very ...
O'REILLY (ratcheting it up, not letting him speak): What's wrong with takin' ...
TAYLOR: Because it would ...
O'REILLY: ... 20% less profit?!!
TAYLOR: Because it would produce gas lines - because gasoline would run out ...
TAYLOR: ... and it would reduce profit incentives to produce new supply.
O'REILLY: Profit incentives?!
TAYLOR: It would also reduce cons - incentives to conserve gasoline.
You talked earlier in the show about the need to conserve.
O'REILLY: We have to do that.
TAYLOR: The best way to get conservation is to let market prices do their job and not to artificially constrain them. You'll get a lot more conservation if you let prices work.
O'REILLY (overtalks last 5 words): It's not artificial if they do it voluntarily for the good of the country.
TAYLOR: It'd be the same effect, Bill Lines are lines. If you price below supply and demand, you're gonna run out. We've learned that experience in '73. We'd learn it again if we went your way.
O'REILLY: I'm not buyin' it.
When Big Energy was gouging California mercilessly, artificially creating brownouts and blackouts, we here in the land of sun and fun shocked everyone by reducing our consumption of electricity over 10%.
Periodically we Californians go through periods of intense drought. We have also learned how to adhere to conserve water.
The conservation techniques we learned by these emergencies become habits with many of us.
While I don't know if O'Reilly's idea of a voluntary 20% cut in profits is the way to go, I certainly agree with him that we Americans guzzle too much gas. However, Jerry Taylor's "free market" approach - the old laissez faire idea - doesn't work either, especially. Multi-national corporations have no loyalty to anything but their own bottom line and will never reduce their profits unless constrained by government to do so.