Posted on 05/08/2006 5:36:03 AM PDT by governsleastgovernsbest
by Mark Finkelstein
May 8, 2006
The worst possible 'solution' to the high cost of gasoline would be price controls, since they would simultaneously drive down production and drive up demand. But running a close second and third in the bad-idea sweepstakes would be a windfall-profits tax on oil companies and a cap on the amount oil companies can pay their executives. Two out of three ain't bad, so let's give GMA's Charlie Gibson an A- in his attempt to demagogue the gas-price issue this morning.
His guest was the soft-spoken James Mulva, Chairman and CEO of ConocoPhillips, the nation's third-largest oil company.
Gibson opening shot was to suggest that "consumers have a right to be angry" in light of the estimated $135 billion the six largest oil companies are expected to make in 2006. Gibson didn't attempt to suggest why high profits justify consumer anger. Remember, market economics dictate that sellers price their products at the level yielding the highest profits, not necessarily at the highest possible price. Consider Wal-Mart, for example, which has reaped huge profits by consistently offering prices lower than those of competitors.
Mulva sensibly explained that the high prices and profits and largely due to crude in the $70-75 range and refining capacity issues. Gibson wouldn't be placated, citing the factoid that the $135 billion in profits is larger than the GDP of Israel and suggesting that the public says "isn't that an obscene amount?" Hey, I'm sure the oil companies would be willing to purchase Israel, but there's no oil there.
GMA employed the same device used by the Today show in its recent interview of Exxon-Mobil CEO Rex Tillerson, collecting viewer questions to put to the respective guests. Of course, since GMA and Today get to choose which viewer questions to pose to guests, the exercise is little more than convenient cover for putting the MSM's own opinions in the mouths of others.
In this case, Gibson passed along one of those viewer questions regarding oil industry profits: "at some point isn't enough, enough?"
Gibson scoffed at Mulva's point that while his company had made $3.3 billion in the first quarter, it had actually reinvested $4.6 billion into adding to production and capacity of our refineries. "Isn't that a cost of doing business?", sniffed Gibson. But then, immediately shifting into Catch-22 mode, Gibson immediately followed that by criticizing big oil for reinvesting only $71 billion on capital investments last year, but spending $74 billion on dividends and stock buy-backs.
"Sounds to me like you have a greater responsibility to shareholders, than to consumers to reinvest." I wish Mulva had told the truth - that a corporation's only real responsibility, other than obeying the law, is to shareholders. Consumers and others benefit through the operation of Adam Smith's 'invisible hand,' the enlightened self-interest that drives corporations to provide products people want at prices they're willing to pay. Mulva didn't really challenge Gibson's depiction of corporations as akin to social service agencies.
Gibson continued to use the pretext of viewer questions to express what surely lurks in MSM hearts: "One of those people that [GMA talked to] in the public said 'is there any sacrifice that Big Oil can make?' The public looks at this and 'says what's unreasonable about a windfall profits tax right now?'"
Mulva: "We've tried that, countries have tried it. It doesn't work. You put in price controls it holds down the price but increases consumption which is not good. Windfall profits tax takes away from the ability of the companies to reinvest, to grow and add to capacity."
Now on his populist roll, Gibson continued: "One of the things that the public gets upset about is as you know, CEO compensation. We just had the CEO of Exxon-Mobil retire and he had a $400 million package. Your compensation is $13 million a year with extraordinary amounts of stock options that can eventually be exercised. When the public talks about sacrifice yes, it might be a token sacrifice, but should there be a cap on those kinds of compensations?"
Answered Mulva: "With respect to CEO compensation obviously these are very, very large numbers but on the other hand, if you look at the oil companies, the international oil companies there are huge responsibilities with respect to asset bases and hundreds of billions of dollars. We have tens of thousands of employees so there is a great deal of responsibilities."
A better answer might have been that if there are going to be solutions to the energy challenges we face, it is going to take the best and the brightest executives to find them. If you cap oil industry compensation, the ablest execs will take their skills to other industries where they can earn what the market says they are worth.
In any case, Gibson didn't explain why $13 million is too much for the head of a company responsible for tens of thousands of employees and hundreds of billions in assets, but $7 million is apparently just fine for a guy with no responsibilities other than to sit in a comfy New York studio doling out MSM conventional wisdom.
GMA/NewsBusters ping to Today show list.
Good Grief!! Are they going to cap rock stars earnings?
Ayn Rand was a profitess.................(sic).....
Nothing about the envirowhackos who have strangled energy production in this country.
Off topic a bit, but last night on 60 minutes dan rather actually did a modestly fair piece about ethanol. It had it's little barbs about the oil companies, but it actually mostly focused on some Iowa entreupreneurial farmers who started an ethanol plant and it didn't have one barb towards the President.
I felt like I had gone through the looking glass.
Exactly. The real question is "How high would gas prices be without the expertise provided by these CEO's"? Stated another way, "How high would gas prices be if Al Gore were an oil industry CEO?"
There's a name for the economic system where the government micromanages the financial resources of a privately owned company. It's called Fascism.
How about television talking heads earnings, such as charlie gibson's.
I wonder if he would take a pay cut from a million per year to $100,000 without complaining.
In fairness, given the chance Al would have invented a way for us to transport ourselves via the ethernet, largely eliminating the need for cars and gasoline ;-)
I say that we limit Charlie Gibson's salary to $35,000 a year. He is being paid way too much just to read words off a page and besides he doesn't need anymore than I do.
Great idea. Let's establish a Fair Wage Commission - perhaps Hillary would be willing to head it up - to determine what the fair compensation level should be for every job in America, and just how much people really need to earn ;-)
Not a bad idea.......... and limit the number of weapons the rappers can carry (and use).
;-)
I was channel surfing and saw that and an NBC dateline piece on Scientology, which didn't really go in depth but they did have a former scientologist auditor who basically said that the scientologists recruit in Hollywood and during their "auditing" seesions write everything down and implied they hold that stuff for blackmail.
It's kinda of like the mafia, once you are in, you can never get out.
What these liberal whiners don't realize is that those CEO are paying a small fortune in income tax if there salaries are that high. You can only reduce your deductions so much. These CEO's are paying via income taxes to support thousands of Mexicans sponging off our social system and educating their children.
They should be applauded by these nit-witts.
They should cap actors salaries as well, and Hollywierdo film producer's box office profits.
All I know is that when I was a kid a candy bar cost 10 cents and now it's almost a dollar. McDonald's burgers were 15 cents and you could buy a bottle of Coke for a quarter. I also just heard that Time Warner just postyed record profits. Why no calls to cap them?
LOL........... and being an old ex-baseball player from the 60's ....... I suggest that the salaries of major league hitters who cannot hit at least .250 should be reduced by two thirds.
;-)
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