Let’s Help Oil Companies Set Record Profits
Why are the oil companies making huge profits? Let’s look at Exxon since they have set the new records on corporate profit. Let’s keep in mind that a barrel of oil is now over $125 and a gallon of regular-grade gasoline is over $4.20 at the pump.
Could it be that a portion of Exxon’s 2007 $40 billion profit is made up of taxpayer subsidies of $17 billion? Could it be that with climbing oil prices, Exxon gets those inflated prices from their pumping wells? Could it be that the oil leases on public property and seabed are grossly underpriced? Could it be that although their product, oil, is a utility that we depend on to survive, and Congress allows that product to be treated as a commodity, subject to the greed and manipulation of the market?
Regardless of what reasons are chosen, they all lead to the same results: huge, bloated profits for the oil companies and a painful slowdown of our national economy. Businesses are forced into failure, prices for all delivered goods are forced upward, the dollar is forced downward in international trading and no one but oil executives and oil company stockholders are happy.
I don’t think that it is acceptable that every working American must pay more to get to work, whether by personal auto or mass transit. I don’t think we should accept that every company in America must pay an oil premium to stay in business, whether to have their salespersons on the road or for delivery of product. While I’m pleased that the Canadians are doing well, it is the first occasion in my lifetime that the Canadian dollar is on an equal footing with the US dollar. A 20% drop in the value of the US dollar against the Canadian dollar is nothing to trivialize. But oil executives and stockholders are smiling.
Oil executives respond to questions about their record-setting profits by pointing out that it costs a lot to search for oil. And there is the cyclical nature of their business. They might not make as much profit next year. Guess what? Those profits are after deducting the cost of oil exploration — Exxon made $40 billion in profits in 2007 and over $11 billion in profit for the first quarter of 2008, a new profit record for any company in any industry. Not bad, beating the robber-barons and monopolies of our historical lore. And yes, there are no guarantees on a company’s future earnings, not in any business. Why should oil companies be exempt from basic economic laws?
Those same executives tell us that the price of gasoline at the pump can’t be lowered due to conditions in the Mideast oil producing countries. Let’s see, if it costs the oil company X to produce their product and they sell it at Y, the difference is Z (profit of $40 billion). That $40 billion is given to the company shareholders, including our $17 billion in tax credits.
What if that $17 billion, plus another $13 billion were credited to the pump price instead of to the shareholders? Two things would happen. Gas prices would be lower, and Exxon shareholders would make only $10 billion. Add to those figures the profits of the other oil companies and our economy would be much more robust and many lives and companies would not be permanently damaged.
Who could help with a plan like this? Congress? Perhaps, but rather than placing pressure on oil companies to save our economy, they are advocating opening up additional off-shore oil leases. It wouldn’t lower gasoline prices but it would give low cost leases to the oil companies, enabling them to pump more oil at the new inflated prices — making more profit for shareholders.
So let’s tell Congress that maybe we should support their suggestion. It is only them and us who can help the oil companies set higher profit records. Maybe the Guinness Book of World Records would issue a certificate to each of us for helping in this historic work. We would want to nicely frame the certificates since we will have plenty of time at home to admire them — it will be too expensive to drive to work.
IndiscreetSage
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