Posted on 05/31/2007 12:15:36 PM PDT by JZelle
Rolling into the busy summer driving season, Congress just can't seem to resist the urge to scapegoat oil companies. Just before Memorial Day weekend, Congress held another in what has become a seemingly interminable number of hearings into "big oil's" role in high gasoline prices and threatening to punish the industry for making a profit. Though many Americans seem to feel low gasoline prices are an American birthright, congressional solutions are likely to make our problems worse.
Before legislating in haste, leaving drivers to repent for years to come, Congress should take a page from the Bible. I recommend Matthew 7:3: "Why do you look at the speck that is in your brother's eye, but do not notice the log that is in your own eye?"
Congress bears far more blame than private oil companies for high gas prices. While oil companies' overall profits are large, at about .09 cents per every dollar of revenue, their profit margins are much lower than many industries, including banking, pharmaceuticals, computers and many household goods. The oil industry has been repeatedly investigated, by multiple agencies at the request of both Democratic and Republican Congresses and Democratic and Republican administrations, and it has never been found to be guilty of colluding or price fixing. This is no surprise, since even the world's largest private oil company owns less than 3 percent of the oil it delivers to the market each day.
(Excerpt) Read more at washingtontimes.com ...
Plenty of FReepers think a lot like government socialists when it comes to oil/gasoline. They’ll likely be along shortly. No amount of facts or logic will convince them of the ridiculousness of their big oil conspiracy theories.
If Exxon’s profit is 10% (and it is), then their profit per gallon is more around the area of 26 cents, not the 9 in the picture.
They ALL need to read chapter two of Thomas Sowell's excellent book 'Basic Economics: The Citizens Guide to The Economy'.
I can live with that as long as they get my gas to me.
It is the taxes that go to fund the NEA that bug me.
How about the tax on booze....that blows my mind. I am so glad I do not partake.
You are paying for this too I hope you know. If someone from the NEA got a $400 Million Parachute I could just hear you.
http://www.abcnews.go.com/GMA/story?id=1841989
The only one paying for this $400 million expenditure is Exxon’s customers.
If you have a philosphical problem with Exxon, then buy your gas from a competitor.
Theoretically, a competitor who in all other ways is equal to Exxon but hasn’t spent $400 million on such a retirement package could sell their gas for, what, $0.02 (totally made up number) per gallon less. They should be able to take market share from Exxon, no? If their market share is impacted, maybe the stock price also. If the stock price, then maybe the shareholders will vote out the Directors who authorized such a large retirement payment.
Whose business is it how any corporation legally spends its money? Ultimately, the shareholders and only the shareholders.
What do you suppose would happen if we got a law passed that rescinded ALL tax on American oil companies exploring and drilling in American fields?
/dream
I don’t really care, to be honest.
I don’t agree with the amount, but that seems to be what the market is willing to pay a CEO of a company like that.
How outrageous is that compared to other companies that pass that amount of money and consumables through their coffers? I don’t know.
But I DO know that the NEA does not provide me with anything that I NEED or is vital to my economic health, such as...gasoline. You bet I would be pissed if the head of the NEA got that. They don’t supply me with a frikking thing.
My thoughts exactly (I didn’t see your response before I replied)
It is what the market can bear. Honestly, I think paying a baseball player $250,000,000 is criminal, but...if that is what people are willing to pay for the enjoyment of watching someone rear up and fire a fastball, then that is what the market will bear.
Try this; build refineries, explore our own oil reserves, and decrease the amount of state and federal taxes on gas.
The demand is out there, the supply has been bottle necked by the environmentalist communists that want to break our economy, to control our lives. They will succeed if we don't stop this crap
MIchael Jackson made 400 Mil one year for prancing around on stage. So did Oprah. No one uttered the slightest complaint. So why shouldn't the CEO of a major multinational with thousands of employees and billions of dollars at stake, make as much as a Hollywood/TV clown who generates nothing of enduring value?
If shareholders approved of this nonsense, I would have no problem. But guess what? They have no say, when supposedly they own the company!
This has got to change going forward to where shareholders really get a say in substantial parachute packages or other nonsensical compensation. My guess is that nearly 100% of the egregious compensation would be chopped substantially.
The “market” is not willing to pay that amount. A closed room group of individuals is, aka the Compensation Committee.
Shareholders need a real voice in this nonsense, it is they who are the owners.
People seem to have forgotten this most basic fact.
It IS part of the market, the same way any other part of a company that sucks up money is.
You have an issue with the way the compensation for this individual is decided on, but to me, it is not important.
It is not important to me in the same way I don’t care about what relative amounts of jet fuel, gasoline or home heating oil are sent to Oakland, CA. The market decides what quantities go there, based on the price people are willing to pay.
Likewise, if a company like Exxon has a certain amount of revenue coming in and allocates an amount of that towards anything in the company, be it corporate salaries or Turkey Basters for Corporate Lesbians, I don’t really care.
If their mismanagement within Exxon changes their prices relative to their competitors in any way, I am going to buy from their competitors, as simple as that.
So, I do disagree with you...the “market” does take that into account.
So you are saying that you have no preference whether $400 Million is put into the pocket of an already overpaid CEO, or into yours as a shareholder?
If this what you are saying, my guess is that you have never held stocks before, or if you did, did it only through mutual funds.
An immutable truth: The Entitlement bug doesn’t just hit those on welfare; it also affects those making egregious sums.
Why should I care what a CEO makes, if the price I pay for gas does not change, or changes so minutely that it does not affect me financially?
If the $400 Million paid to that CEO is taken out of the pockets of the shareholders, do shareholders not have a choice whether to hold stock in a company or not? Did someone put a gun to their collective heads? If shareholders get a lousy return on their stocks...what happens to the stocks? Does their value go down, because they turn into a lousy investment? If they become a lousy investment, will people invest their money in other companies that are providing a better value?
If someone is hell bent on holding stock in an oil company, and Exxon is such a lousy deal because they pay $400 million to one guy, what stops that person from selling their stock in Exxon and buying stock in Shell, British Petroleum or some other oil company that only pays the CEO a paltry $50 million?
Where we differ is in what constitutes an “egregious” sum, and what mechanism should be in place to regulate that.
If I read you correctly, you think there should be a mechanism in place via corporate law that puts some kind of ceiling on the compensation packages for executives.
I think the mechanism is (and should be) market forces. It is the main reason why capitalism works so much better than socialism.
You are missing the point entirely. Shareholders, supposedly owners of the company, have absolutely no say in what the Compensation Committe does! If I own a business and I hear that one person is making 100X what someone else is, I can go and fire the guy. Or at least bring him into line.
Currently, shareholders do not have that ability; in fact, they have practically no voice at all.
IMO, the SEC should mandate at least one individual investor to each board to look after the common guys interests. Until something like this happens, few will have faith in the markets. I speak with a group of investors regularly and many voice the same complaints I do.
The ones who are satisfied with the way things are either do not own stock or own stock through mutual funds only.
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