Wednesday, May 21, 2008

Big Oil Companies Acting the Victims

Just when you thought that the falsehoods being spread by the Big Oil corporate bosses could not get any more outrageous, today the falsehoods being spread by Big Oil corporate bosses just went from whoppers to disgraceful whoppers.

It seems that we are to pity these poor, poor men because they are victims.

I read about it on MSNBC’s website but I think every media outlet in America is running some sort of story on the Senate hearing held today at which 5 CEOs from BP America, Chevron, ExxonMobil, ConocoPhillips and Shell Oil swore under oath that it wasn’t them robbing people at the gas pump.

Said Senator Diane Feinstein (D - CA) of their woeful complaints:

“[You have] just a litany of complaints that you’re all just hapless victims of a system. Yet you rack up record profits ... quarter after quarter after quarter.”
Replied Chairman Robertson of Chevron (formerly ChevronTexaco):

“I’m sorry to sound like a victim.”
Whining further, oil executives said that “the cause is not company profits but global supply and demand.”

“Supply and Demand”.

I am old enough to know about what happens when there is not enough oil to meet the demand. You have gas lines. You have gasoline rationing. The only gas lines I have seen are at the Murphy station in Richmond when they are charging only $3.61.9 for Regular.

“Supply and Demand” is hogwash.

Oh, in addition to this, oil executives complained that they were forced, forced mind you, to charge these high prices because their profits will be much less in the future, but they must pay for their long-term investments. This is just an “up cycle”, they say. Profits will be less in the future.

Beg to differ. What kind of “upcycle“ lasts for 5 years? That’s not an upcycle, that’s a trend. Let me illustrate. Here at right is a plot of Chevron’s quarterly net profit totals since January 2003. In 2003 they made just under a $1 billion in the first quarter, and that profit steadily rose, more or less, to this past quarterly profit of $5 billion. That’s a trend. That’s a trend that says that, more or less, the company is going to be reporting net quarterly profits of a billion more dollars in each quarter of each succeeding year.

If anyone is a victim it is the consumers who are starting to chafe at the yoke over these gasoline prices. I’m OK, I’ve got my rice burner but what with the SUV buying spree we have had over the past 5 years? Others are truly hurting.

And I’ll tell you who else is not benefiting from these oil prices. The stockholders. Yes, there is a method to my madness and I own a couple or three shares of Chevron, so this was also an exercise in finding out by how much Chevron was sticking it to stockholders like me. Study the chart below the first. It shows Chevron’s quarterly dividends over the same 5-year period. Notice anything? Like how Chevron’s net profits have quintupled in the past 5 years but dividends haven’t tracked that? They’ve just about doubled in that period. Dividends should be about $1.75 per share, not the present 65 cents.

The CEOs were asked how much lucre they were pulling down. Answers varied between $2 million and $12 million per year. That’s just the tip of the iceberg. They failed to mention the lucrative stock options available only to the executive level in Big Oil. Someone forgot to recall former ExxonMobil chairman Lee Raymond’s golden parachute was worth $400 million when he retired in 2006.

No, all this is, is outrageous greed. Outrageous greed being accompanied by outrageous lies.

In another post, I suggested that the high price of petroleum was an effect of oil speculators, and that their main fear is war in the Middle East. The war in Iraq, then, is the chief cause of high oil prices, not “Supply and Demand”.

What does that make these Big Oil companies, then? Companies making outrageous profit in a time of war? There is only one concept that describes them: “War Profiteers”


Anonymous said...

Just remember - your large SUV, and those of all your fellow Americans, contributes NOTHING to the global demand for oil. Consume as always!

Hal said...

What the H-E double hockey sticks are you writing about, Anon? Is there something deep here? America is the #1 consumer of petroleum. China and India have had a recent effect, but don't let that go to your heads. We poor Americans will still buy the product when emerging economies will wince. We are addicts. You can still do without.