Posted on 03/15/2006 5:29:56 AM PST by JustaCowgirl
To twist a line from the Gipper, "There they go again."
Once more, Americans are being treated to the spectacle of seeing oil executives hauled onto Capitol Hill for some low-grade abuse by our lawmakers. "How dare you earn profits?" seems to be the order of the day, at least if you judge by the sound bites leaking out of the Senate Judiciary Commitee and the coverage in the mainstream press.
"Company X earned X billion in 2005," comes the refrain.
"Scandalous!" replies Joe Sixpack, exactly as he's expected to. Never mind that "profit" figures are misleading, since they don't include the very real costs of capital spending. Never mind that we live in a system where we agree that profits are good, because they attract the capital that provides for our economic growth.
In the hot seat were execs from BP (NYSE: BP), ConocoPhillips (NYSE: COP), ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), Royal Dutch Shell, and Valero (NYSE: VLO).
There were the usual insinuations about price gouging, and a bill from Arlen Specter designed to let the government stop oil and gas mergers if it believes these would somehow reduce available energy supplies. While there's plenty of suspicion and blame to go around, none of the stories I read bothered to mention the incredible sums that the companies invest to keep the juice flowing.
Allow me to fill them in. ExxonMobil spent $14 billion on capital expenditures last year. Chevron spent $9 billion. BP spent $12 billion. Valero spent $2 billion. ConocoPhillips rolled $11.6 billion, or more than 85% of its net profits, back into the business.
Let's make that clear. This real spending is unaccounted for in those scary-looking "profit" figures that the soak-the-rich crowd is using to try to rouse the rabble. For our lawmakers and the press to ignore such basic facts is inexcusable. But there's a popular story to tell.
Nothing I read mentioned, except inadvertently, that the real reason gas costs so much is that there's absolutely no incentive for Americans to moderate their use of it. Governments continue to encourage gas gluttony by building miles of cheap roads (on borrowed funds) while alternative transport withers. At the same time, they refuse to lift a finger to demand higher gas mileage from automakers.
Can't mess with free enterprise there, because that wouldn't play well back at the ranch, and elections are coming up. Just you try to tell the voters that they're to blame for gas prices -- that if they didn't all drive the 4-ton Canyonero, and heat the 4,000 square-foot house, there'd be more gas to go around, and prices wouldn't shoot up the way they have been. Nope, you try that and they'll ride you out of town on a rail. It remains, as always, much easier to produce a dog-and-pony show designed to look like you care, and stick the blame on those big, evil corporations.
Too bad those big, evil corporations are in fact owned by small, 95%-less-evil entities called shareholders. That's right; we all own them in our mutual funds, our pension plans, and our 401(k)s. If people realized that the government's oil-industry shakedown was actually aimed at pulling profits out of their own retirement accounts, I imagine there would be a lot less enthusiasm. But don't count on hearing that on Capitol Hill or in the sound-bite news coverage. The real story's far too complex to be popular.
I'm sure Teddy Kennedy was present and outraged, that is unless he's under the table dead drunk during the proceedings.
See DJ Venezuela To Charge Oil Majors 50% Tax On Orinoco Crude
Of this group, (BP (NYSE: BP), ConocoPhillips (NYSE: COP), ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), Royal Dutch Shell, and Valero (NYSE: VLO)), Valero and Royal Dutch Shell won't feel the bite because they are not involved.
Big Oil is to the U.S. left as Israel is to the Middle East left--the evil demon under the bed useful for threatening their 'children.' (Children = constituent mob looking for somebody or something to blame for their self-induced problems.)
Other than that, pretty good.
Where do the Democratic Senators of the oil states stand on these attacks? Are their any? Are they speaking up for their state's economies?
The good news is that I invested heavily in some of these companies. Heavily in the E&P sector a couple of years ago. For the kind of profits that I've made, I gladly accept my added fuel costs.
Most people when they pass gas they do it the normal way, out their rear end, but these guys and gals in the Congress do it out of their mouths just for the ears of their constituents!
Arrogant hypocrites!
Wall Street firms are recording record profits. Will they go after them too? The current state of the Senate is a disgrace.
Not just the capitalists. Anyone who gets a chance should check out these senators' financials. A lot of these pols, Teddy included, are making money off Big Oil...
When are they going to call in the executives and actors for "Big Hollwood" making obscene profits with piss poor product?
Nice summary of the situation, both of you. Capitalism is apparently no longer to be encouraged in any form or fashion by the Democratic Party in the U.S.
They should all go down and join Hugo Chavez and Jimmah Carter and be good Socialists in Venezuela.
Absolutely. How many of these posturing idiots have Buy orders for these companies in with their brokers while they're talking.
And let's hear from Jay Rockefeller on this subject while we're at it.
Just as Goldman Sachs comes out with huge profits....and Microsoft has huge profits...and a movie star has huge profits.....but BIG OIL is bad
The funny thing about this is that people who know the oil business look at these companies and laugh at the silly notion that they are major players in the industry from an prospective investor's standpoint.
Ditto. Valero and Kinder Morgan Energy partners.
"Just as Goldman Sachs comes out with huge profits....and Microsoft has huge profits...and a movie star has huge profits.....but BIG OIL is bad"
And how about Google and Yahoo? Oh wait, they're on the 'correct' side of the political fence. Never mind.
I have a sizeable (for me) position in Kinder Morgan Energy partners. Also recommend you look at Magellan Midstream.
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