Petroleumworld`s
Opinion Forum:
viewpoints on issues in energy & international
politics.
Saturday's
Lagniappe
Stop
the Oil Company Greed
By
Ralph Nader
Four years
ago, gasoline was $1.36 a gallon on average. This past January,
gasoline prices were 72 cents lower than they are today at over
$3.00 per gallon. Production and refining costs since those
time periods have not increased by much. Who’s raking
it in?
The
oil-producing nations, for one, and the ExxonMobils of the world
– the giant multinational oil companies. This Niagra of
daily profits – ExxonMobil is making well over $1250 a
second and over $110 million a day – does not prompt any
action by our oil-marinated Congress and White House.
ExxonMobil
just reported a quarterly $10.4 billion profit, up 86 percent
from last year’s second quarter. A few in Congress urge
an excess profits tax. It is a one-day wire service squib. Others
say they want a law on price gouging. It disappears by sunset.
The Senate
Judiciary Committee passed a bill a few months ago to authorize
prosecution of the oil-producing countries under the antitrust
laws. Imagine, Bush suing the countries whose oil powers our
cars and economy. The hapless Senate Committee, however, did
not propose explicit authority to break up the oil company giants
in this country under the antitrust laws.
Look what
ExxonMobil is doing with its huge profits and margins. Well
it sure isn’t giving its gas station owners any break.
Or the poor, as Republican Senator Charles Grassley (Iowa) has
urged in vain. The company isn’t putting real money into
alternative energy. Last year it assigned three-hundredths of
1 percent of its profits – $10 million – to renewable
energy. It isn’t expanding refinery capacity. A major
way the oil companies keep prices spiraling and profits flowing
is to maintain tight refinery output.
Where are
the excess profits going? One flow is into the huge executive
salaries and retirement packages. ExxonMobil’s retired
CEO, Lee Raymond, got his rubber-stamp board to give him –
one man – a $400 million going away package. But the big
use of Exxon’s profits is buying back its own stock. Check
these brazen figures. In the first quarter of this year, Exxon
reported spending $5 billion buying back its own shares. This
is more than the $4.1 billion it said it would spend on exploration
and production.
There’s
more. The oil giant said it would spend $18 billion repurchasing
its own shares in the next three quarters of 2006. This is great
news for Exxon executives with stock options. Greed at its highest,
to heck with the energy needs of the country and stopping the
gouging of American motorists.
Let’s
break down the figure of one year’s stock buyback by ExxonMobil
totaling $23 billion which obviously the company does not need
for its regular business of finding, refining and marketing
gasoline and heating oil. That sum of money alone would reduce
the price of gasoline by about 15 cents per gallon if spread
nationwide.
Moreover,
ExxonMobil, unlike some other oil companies, is even fighting
the proposed reduction of the subsidies that Congress gave to
the companies’ operations in the Gulf of Mexico when oil
was around $40 a barrel. Now at around $75 a barrel, ExxonMobil
still wants your taxpayer subsidies.
Back in
the Sixties, here is what Congress would probably have done
in a similar situation: Impose an excess profits tax and investigate
and subpoena oil company records to determine the kinds of parallel
prices, restricted refinery outputs (the industry has closed
scores of refineries in the past 40 years) and mergers that
warrant tough antitrust prosecution. Never would the Congress
of those years have tolerated the merger of the number one and
number two giants in the oil industry – Exxon and Mobil
companies.
In the Seventies
there was a big fight in Congress over a 10% or so increase
in the regulated price of natural gas. Now the industry is free
of regulation and the price of natural gas has spiked from ten
to fifteen times what it was in the Seventies, adjusted for
inflation. There were even calls for a new federal oil company
to be a yardstick like U.S. Naval shipyards were for private
shipbuilders. Some Senators were ready to turn the oil industry
into a public utility – “cost plus” regulation.
What to
do now, given that the corporate environment in Washington is
bent on leaving consumers defenseless? The Foundation for Taxpayer
and Consumer Rights (see www.consumerwatchdog.org) out of Santa
Monica, California makes three proposals:
First, they
want California voters to enact Proposition 87 in November.
Called the Clean Energy Initiative, it would levy a profit-based
“extraction tax,” which could not be passed on to
motorists. The money would be used for development of alternative
fuels and more efficient transport vehicles.
Second,
pass a tough price-gouging law as proposed by California Attorney
General Bill Lockyer and Assembly Speaker Fabian Nunez.
Third, pass
Proposition 89, the Clean Elections Initiative on the November
ballot in California. This would provide public funding and
place limitations on lobbies passing out money in campaign contributions
to lawmakers.
Here’s
my suggestion. With all the websites and blogs, why can’t
a million energy consumers band together to start one big energy
reform rumble that will be heard by both Washington and the
oil giants? Don’t even need money for stamps, when you’ve
got the Internet. What about it bloggers and all you e-advocates?
Or is it all about MySpace?
