“Capitalism Sucks”

Socialism: You have two cows. The government puts them with everyone else’s cows, and you help care for the herd. The government issues you milk and butter, as its regulations allow.

Communism: You have two cows. The government puts them with everyone else’s cows, and your district helps you care for them. Your community divides the milk and cheese – after the national, central, district and local leaders take a cut.

Capitalism: You have two cows. You sell one, and buy a bull.

–Unknown

The beet-red streak in her Betty Boop haircut reflected the greenish-white color of the conference room’s fluorescent lamps. The light also emphasized other eccentricities: silver eyebrow rings; a glinting rhinestone on her right nostril; fingers laced with snake and skull rings; and gloss-black fingernails.

I was early for a meeting; she was the IT person assigned to the AV gear. Nearby, a Mac book laptop rested on the conference-room table, a full-width sticker – “Capitalism Sucks” – had been pasted diagonally across its top.

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“Your laptop?” I said.

“Uh-huh,” she said, distractedly. She was doodling and didn’t look up.

Geeks need time to warm up to me – I think it’s my age, but it could also be my trait of asking direct questions.

I asked, “Capitalism sucks?”

“Yeah.” The doodle, I noticed, was a human skull. With wings.

“So, what economic system do you prefer?”

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She looked up, puzzled, and said “What?”

“If you don’t like capitalism, what economic system would you prefer to live under?”

“Uh…”

Okay, her mind wasn’t on national economics, so a certain awakening period was acceptable. I helped: “Socialism? Or perhaps Communism?”

“Uh. Socialism.”

“Like in England?”

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“Yeah. England.”

“You don’t mind the higher taxes socialism requires?

“Huh?”

Long story short: She, a community-college intern, didn’t – amazingly – realize that citizens’ taxes pay for government-sponsored social programs, or that communism, as originally outlined, leveled the income field.

I told her the story of the two cows.

I discovered capitalism years ago, while on a bicycle trip through Adana, Turkey. I was in the U.S. Air Force then, and, one day, a Sunday, I rode from the Incirlik airbase to downtown Adana, then turned north, uphill, to the Sehan Baraji reservoir dam. I crossed the dam, viewed the Taurus Mountains and, after having checked my map, coasted back through ancient neighborhoods, to regain downtown. My route twisted along narrow streets, to eventually cross the Seyhan River bridge, an ancient Roman structure.

Near the bridge, I stopped at a fruit vendor’s stand and bought an orange. The vendor gouged me 20 lira – one U.S. dollar – for the fruit. He applied basic supply-and-demand market tactics. To him, I looked prosperous, even though I was in jeans and T-shirt and riding an old Raleigh bicycle (a ’60s Roadster, with dynamo lamps). Most importantly, I wanted an orange, and he, the only fruit vendor in sight, had many.

Had other fruit vendors crowded that corner, my orange surely would have cost less. Such supply-and-demand logic prevails. For example, the reasoning that says drilling offshore, U.S.-based oil wells will reduce our petroleum prices.

More wells, less costs, right?

Not necessarily. Supply-and-demand pricing depends on the competitive environment, but that environment, like the backside of the moon, may have unseen facets. One concern on new drilling is the distribution of U.S.-born oil – because it doesn’t all stay in the United States.

A 2007 U.S. Energy Information Admin. (EIA) report said the United States exported 1.43 million barrels per day of crude oil and crude-oil products, roughly 10% of what we import. The EIA is a statistical agency within the U.S. Department of Energy (DOE); its PR data said it provides policy-independent data, forecasts and analyses regarding energy.

Congressman Ed Markey (D-MA), on August 19, wrote to President Bush regarding these oil exports. He said we could cut our foreign-oil dependency by 10% if we quit shipping petroleum products out of the country.

On July 30, the Boston Globe website, Boston.com, in a copyrighted story, reported that, in May, U.S. oil companies shipped 183,000 barrels of gasoline a day out of the country; they also shipped 444,000 barrels of diesel fuel and 76,000 barrels of jet fuel. One barrel equals 42 U.S. gallons.

Markey said offshore drilling would produce 200,000 barrels per day, one-ninth the amount of oil the United States currently exports. He added, “Moreover, at the current export rate, by the time the first barrel of oil could be produced from increased offshore drilling, we would have already exported the equivalent of nearly 40% of the oil that is projected to lie beneath the protected offshore areas.” He asked the president to protect American consumers by determining how to stop these exports.

Julia Bovey, spokeswoman for the Natural Resources Defense Council, has said, “There is a real misconception that proponents of drilling [including both presidential candidates] are implying that somehow, this oil is going directly to U.S. consumers.” She said the oil companies are the ones who will benefit from this action.

British Petroleum, by the way, owns 46.93% of the Trans-Alaska Pipeline System (TAPS). Other owners are ConocoPhillips (28.29%), ExxonMobile (20.34%), Unocal (1.36%) and Koch Alaska (3.08%). More than 15 billion barrels of oil have moved through the TAPS since its startup in 1977. The pipeline ends at the Port of Valdez (Alaska) shipping station, and, from there, it moves via tanker ship to Washington and California refineries.

Although official distribution information is difficult to find, the Valdez Museum and Historical Archive, on its unofficial website, says, “Valdez is a busy seaport, shipping oil from the TAPS to the West Coast of the United States, and now to the Orient (my italics).

In fairness, I’ll add that other sites say TAPS oil stays in the United States. However, we have other U.S.-based oil sources: the Midway-Sunset oil field in California’s San Joaquin Valley, for example. California has 13 gasoline-producing refineries that, I’m sure, keep California oil separate from TAPS oil.

A July, 1999 U.S. General Accounting Office (GAO) report, “Alaskan North Slope Oil, Limited Effects of Lifting Export Ban on Oil and Shipping Industries and Consumers,” tells of decisions that may have foreshadowed many of these events. It said Congress banned exporting Alaskan North Slope oil when it authorized the construction of the Trans-Alaska Pipeline in 1973. The U.S. government reversed this policy in 1996. A New York Times article, dated April 19, 1996, announced, “President Clinton gave formal clearance today for exporting Alaska’s North Slope oil, ending a 23-year-old ban.”

A subsequent GAO study said lifting the ban raised the relative prices of Alaskan North Slope and comparable California oils (compared to widely traded world oils).

A May, 2005 report written by Larry Kumins, VP, research and analysis for the Energy Policy Research Foundation Inc., a nonprofit, energy-study organization funded by 35 oil companies, said Alaskan oil exports stopped in 2000. Kumins refers to Alaskan-sourced oil, not other U.S.-sourced oil. Also, because Alaskan oil goes to various, oil-product producing refineries where distribution is difficult to track, we can presume he’s referring to direct exports.

EIA administrator Guy Caruso said new, offshore drilling would have a small effect. Caruso has more than 30 years of experience in energy markets, policies and security. Other energy observers say it would take five to 10 years to find new oil and bring it on line. Even then, the United States’ refineries may not be able to process it because – remember the oil company’s earlier defense – refinery limitations cause shortages?

MSNBC senior producer John W. Schoen, on November 22, 2004, wrote, “As of this week, the industry is producing gasoline and other end products at something like 98% of capacity.”

Less than 150 petroleum refineries operate in the United States, and no new plants have been built since 1976.

Currently, both presidential candidates – McCain and Obama – support offshore drilling, which indicates they both support expanding America’s energy resources. However, according to New York Times columnist Thomas Friedman’s August 13 column, they both missed the July 30 Senate vote on bill S. 3335, the Jobs, Energy, Families and Disaster Relief Act of 2008.

In the Senate, a missed vote counts as a “No” vote.

Had the bill passed, Freidman said, it would have extended investment credits for installing solar energy. It also listed additional production credits for building wind turbines and other energy-efficient systems.