6139008-History-of-Money

Crude" price by calling it Iranian oil. For almost fifty yeas most Americans have been using Russian oil in their cars.Standard Oil refineries, which produce gasoline from crude oil, are located at large sea ports like San Francisco, Houstonor Los Angeles, not near any of the large American oil fields. Most oil from the Persian Gulf is shipped in oil tankers tothose large American refinery-ports. The other major (and frightening) post-war impact on domestic US oil supplies was adeliberate policy decision to serve the domestic market largely from American oil wells. Under the pretext of a quotasystem to protect "national security," so that the US would not become too dependent on foreign oil, cheap foreign oil waskept out of the United States, while domestic fields were rapidly depleted. In the 1960s, for example, domestic prices rosegradually, although prices dropped by about 40% in foreign markets. Furthermore, overseas competitors like the WesternEuropeans and the Japanese benefited from low energy prices, while US industry paid increasingly higher prices.In 1952 the Attorney General began criminal antitrust proceedings against the major oil companies, but these were haltedby the personal intervention of President Truman on January 12, 1953, in the last few days before he left office. TheEisenhower administration regarded the enforcement of the antitrust laws as "secondary to the national security interest,"though it was never clear how national security was involved. By the end of 1953 the case had been transferred from theDepartment of Justice to the State Department under John Foster Dulles, at the same time as Dulles' old law firm washired as defense counsel by the oil companies. This effectively ended the proceedings, and abuses continued at everylevel, from interference with governments to price gouging the individual consumer. By 1970, 94% of US domesticreserves were held by only 20 companies. The top eight oil companies in terms of their holdings of US domestic oilreserves were also the top eight in production, the top eight in refining, and the top eight in marketing: they were theAmerican five of the Seven Sisters, Exxon, Mobil, Texaco, Chevron, and Gulf, plus Shell, Amoco and Arco.The extent of cartel control can be judged by working out the cartel's best strategy, and then comparing that against theactual behavior of the market. The cartel would best be served by stimulating and then satisfying an increasing market forpetroleum products on a global scale. More sales mean more profits, as long as selling prices are kept high and stable,and production costs are kept low. The facts are that World consumption of crude oil rose at a clockwork 9.55% a yearfrom 1950 to 1972, through economic times that ranged from boom to recession, through war and peace, through crisessuch as the successive Arab-Israeli Wars, the Vietnam War, and the nationalization in Iran in 1951-1953. Oil profits wereunbelievable. In 1947, Saudi oil cost 19¢ a barrel plus 21¢ royalty, and Bahrain oil cost 10¢ a barrel plus 15¢ royalty.Consumers were paying $1.80 a barrel and more for that same crude oil. Even when development costs of the oilfieldswere figured into the selling price (as they should be), the oil companies were making a great profit.In fact, profit margins increased enormously in the 1950s and 1960s while production costs decreased. The volume of oilshipped increased, and the advent of supertankers decreased shipping costs while selling prices were increased. In thelate 1960s, Middle East oil that was delivered to Europe and the United States at $2 and more a barrel had cost less than40¢ to produce and ship. In 1957 half of Gulf's profits came from its share in the Kuwaiti oilfields. Aramco's profitsaveraged 57% of its invested capital in 1952-1961. But the most creative way for the majors to maximize their globalprofits and to satisfy the producer nations at the same time was to take advantage of tax legislation in the United Stateson "foreign tax credits." Suppose that Exxon pumped oil in Slobbovia, and paid tax at 35% on its operations there, at atime when company tax rate was only 15%. The foreign tax credit specified that Exxon could calculate the "extra tax" of20% it had paid the Slobbovian Government, and could deduct that amount from its tax bill in the United States. As criticspointed out, this essentially involved the American tax payer in a direct subsidy to the Slobbovian government, exceptthat the check was written on the American taxpayer by Exxon. All the majors used this tax avoidance scheme from theearly 1950s, and it helped to maximize their profits. How? Surely they were paying the same tax bill, even though the UStaxpayer received a smaller amount than before? The trick used by the companies was to have the producer nationincrease its tax rate instead of its royalty rate. If the Saudis had pressed for increased royalties, the companies couldhave deducted that expense only from their profits. Because the Saudis who didn't care where the money came from tooktheir cut in taxes, the companies could deduct the same amount, not from their profits, but from their US tax bill. Carefulcalculation and negotiation between the companies and the producer countries could allow the companies to gain themaximum benefit by manipulating this tax loophole. The US National Security Council was involved with the US Treasuryin promoting this scheme, even though it meant a major shortfall in the US government's tax revenue. Tax lawyers wereeven sent by the US Treasury to Saudi Arabia in 1950 to help that country formulate the necessary company tax laws tostart the scheme. In 1951 the Kuwait contract was revised in the same way; Iranian taxes on the new Iran consortiumwere set up in the same way in 1954; and the pipelines through Lebanon were taxed in 1956.Here is how the system worked in the early 1950s. Before the foreign tax credit was used, Middle East oil was sold at$1.75 a barrel; production costs and royalties totaled 41¢, leaving $1.34 pre-tax profit per barrel. About 43¢ went on UStaxes, leaving a net profit of 91¢ per barrel for the company. In the new scheme, there was still $1.34 pre-tax profit. Butif Saudi taxes were tuned to yield the Saudi government half of the profit (67¢), the company could now deduct that 67¢from its American taxes. Not only would it not pay the 43¢ it used to, it could protect or "write off" some of its US profitsagainst tax, with each 43¢ of deduction worth about 24¢ of US profit protected against taxation. The company wouldmake a net profit of 91¢ a barrel, just as it did before. The Saudis receive their royalties as before, plus 67¢ tax. TheAmerican tax system would lose the 43¢ the company used to pay, plus another 24¢, that is, the American tax payerwould lose the 67¢ that the company paid the Saudi government, and would have to come up with the missing amount.The transfer of funds was enormous, and growing. In 1951 Aramco's US tax bill fell from $50 million the year before to $6million, while the Saudis received $110 million instead of $66 million. By 1955 the annual loss was $154 million. On March31, 1955, the Warburg-Kuhn-Loeb controlled bank of Manhattan was merged with the Rockefeller's Chase Bank - thusmaking the great "Chase Manhattan Bank. In 1958, Nelson Rockefeller is elected governor of New York.The Hidden History Of Money & New World Order Usury Secrets Revealed at last! Page 620