A Kind Word for Big Oil
By Alan Caruba (05/24/07)
Is there a politician breathing this summer who has anything good to say about "Big Oil"? If there is one topic that is safe to demagogue, it is the price of gasoline at the pump.
As a writer who closely follows the energy industry, I recently received ExxonMobil’s “2006 Corporate Citizenship Report”. It arrived the same day I read about Rep. Bart Stupak’s (D-MI) “Federal Price Gouging Prevention Act.” The contrast is educational.
ExxonMobil reported that, in 2006, it had achieved a record low number of oil spills to the environment. On the average, this represents a 21% reduction from the previous year and 10% per year since 2000. Bear in mind, ExxonMobil extracts oil internationally, so this does not apply just to the U.S. I doubt that most people know that ExxonMobil is that candid about the problem.
Something else people probably don’t know about is the company’s interest in about a hundred cogeneration facilities in more than thirty locations worldwide, generating some 4,300 megawatts of power. This capacity also reduces global CO2 emissions by more than 10.5 million metric tons annually. That’s equivalent to taking two million cars off the road in America.
Little known to the public is the extraordinary generosity of the company. In 2006, it made $9 million in grants through its Africa Health Initiative and more than $2.5 million through its Educating Women and Girls Initiative. Outside of the pharmaceutical industry, ExxonMobil is the largest private sector donor to malaria research activities. In 2007, the company became a founding sponsor of the National Math and Science Initiative, committing $125 million to encouraging this area of education.
In 2006, ExxonMobil, its divisions and affiliates, along with the ExxonMobil Foundation, provided a combined $138.6 million in charitable contributions and community investment worldwide.
But Rep. Bart Stupak, along with his cosponsors—86 Democrats and 3 Republicans—want to make it a crime to “sell crude oil, gasoline, natural gas, or petroleum distillates at a price that is unconscionably excessive or indicates the seller is take unfair advantage (of) unusual market conditions or the circumstances of an emergency to increase prices unreasonably.” This, my friends, is grandstanding.
The bill would impose imprisonment and corporate penalties of up to $150 million a day. And do you think for a minute that this will actually have any impact on the cost of gasoline?
In case you’re wondering what does impact the cost, it is called market conditions. As Marlo Lewis, a senior fellow of the Competitive Enterprise Institute, points out, “Constraining the ability of gas companies to set prices according to supply and demand is a recipe for rationing. In the end, there will be less gas available and the people who will get it will be those most prepared to wait in line.” Welcome to the 1970s!
Columnist George F. Will recently noted that, “Gasoline consumption has increased 2.14 percent during the past year.” In inflation-adjusted dollars, $3.07 is less than gasoline cost in 1981.
Will provided the reality of who is really making a ton of money off of every gallon of gas you purchase. “While oil companies make about 13 cents on a gallon of gasoline, the federal government makes 18.4 cents (the federal tax)…” When you add in the tax imposed by States, you discover that California, for example, makes 40.2 cents on that same gallon of gas, and San Francisco collects a local sales tax of 8.5 cents. In Wisconsin, the State law requires retailers to sell gasoline for 9.18 percent above the wholesale price.
Federal, state and local communities extract more from your wallet than Big Oil every time you top off your car’s gas tank.
It’s not that Big Oil isn’t making billions, but they are also spending billions to insure that you can have gasoline for your car and oil to heat your home, plus all the other products that are derived from oil. And Big Oil is faced with a world of problems in the process. As Business Week recently noted, “Much of the global oil patch is now off-limits.”
In case you haven’t noticed, Hugo Chavez, Venezuela’s dictator, intends to take over the assets of the oil companies that have invested billions in that nation. In Nigeria, the oil industry is under attack from various factions. Iraq, now free of Saddam Hussein’s butchery, has yet to have met a reasonable standard of productivity. Iran has announced a rise in the price of gasoline because it too lacks refinery capacity. Other areas of the world, such as deepwater wells, require enormous sums of money to explore, drill, extract and transport oil.
So, you may be a bit more inclined to cut Big Oil a bit of slack. I think about that every time I fill up my car’s tank.
© Alan Caruba, May 2007
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