Exxon Mobil Needs a Hug

[Fash]

http://www.nytimes.com/2008/03/02/busin ... ref=slogin

As I was sitting at my majestic TV in a majestic suite at the Mandarin Oriental Hotel in Miami a couple of weeks ago, going over notes for a speech the next morning and waiting for Crockett and Tubbs to speed by, chasing drug kingpins in their “Miami Vice” motorboat, I watched Barack Obama speak in Madison, Wis.

As usual, Senator Obama gave a fine oration, with thunderous applause from the audience as his reward. But then I was beguiled by a series of gifts he was going to give the American people (of course, with their own money): universal health care, antipoverty programs, large grants to college students in return for community service (a darned good idea) and other goodies.

Then he talked about the country’s energy policy and how he planned to change our dependence on oil. And he took aim at Exxon Mobil, which had almost $12 billion in earnings last quarter, and said that good old Exxon Mobil wouldn’t part easily with its profits.

Now, I know it’s primary season. I know Democratic candidates have to make obeisance to the populist, antibusiness wing of their party, just as the Republican front-runner, Senator John McCain, has to make bows and curtsies to the supply-side part of his (and my) party.

But Mr. Obama’s comments about Exxon Mobil are, as folks used to say, fightin’ words.

Mr. Obama is clearly an intelligent man. So it may not be too early to start a small process of education about Exxon Mobil and other oil companies and why attacking them is not smart. First, Exxon Mobil, like all the other gigantic integrated energy companies in this country, is owned not by a cabal of reactionary businessmen holding clandestine meetings in a lodge in the Texas scrublands (as Oliver Stone so brilliantly illustrated in “Nixon”).

Exxon Mobil, in fact, is owned mostly by ordinary Americans. Mutual funds, index funds and pension funds (including union pension funds) own about 52 percent of Exxon Mobil’s shares. Individual shareholders, about two million or so, own almost all the rest. The pooh-bahs who run Exxon own less than 1 percent of the company.

When Exxon Mobil earns almost $12 billion in a quarter, or $41 billion in a year, as it did in 2007, that money does not go into the coffers of a few billionaire executives quaffing Champagne in Texas. It goes into the pension and retirement accounts of ordinary citizens. When Exxon pays a dividend, that money goes to pay for the mortgages and oxygen tanks and in-home care of lots of elderly Americans.

So, Mr. Obama, which union pension plans — and which blue-collar workers who benefit from them — will be among the first you would like to deprive of the income that flows from Exxon’s rich dividends?

When Mr. Obama or his Democratic rival, my fellow Yale Law School graduate Hillary Rodham Clinton, go after the oil companies and want to take away their profits, they are basically seeking to lower the income of the ordinary American. Why do that? It’s just cutting off one end of a blanket and sewing it to the other.

Years ago, there was a comic strip called “Pogo” by Walt Kelly, and the possum who was its hero uttered a deservedly famous line: “We have met the enemy and he is us.” This applies to Big Oil. Its profits are our income. Its employees are overwhelmingly not millionaires — and, by the way, it’s not illegal or evil to be a millionaire. They are our neighbors and the people who get us the gasoline to run our cars and trucks and the oil to heat our homes.

And, after expenses, the money hauled in by Exxon Mobil and other companies like it goes vastly more toward exploration and finding new ways of delivering oil and gas to us slobs in our cars than it does to well-heeled oil executives. It may be a scary fact, but we need the oil companies.

Meanwhile, all over the world, from Russia to Venezuela to Africa to the sands of the Mideast, nations with large oil reserves are making it harder for American energy companies to get their hands on oil and gas. If they succeed and re-cartelize the price, current prices may look cheap.

We should not be beating up Exxon Mobil and its brethren and making them cry uncle to Uncle Sam. A better policy might be to keep making sure they have no role in price-fixing, and then to encourage them to go after and lock up as much oil and gas as they can for us to burn up. We would be better off with stronger oil companies that can serve our energy needs for the long haul than with weak and overtaxed oil companies that cannot deliver the needed juice.

Finally, envy is simply not good economics. It has never led anywhere except to trouble, and we have enough divisions in this country already. As I said, Mr. Obama is a smart man. And Senator Clinton is a smart woman. I have worked in politics and with politicians. I know they have to say crowd-pleasing things (just as Republican leaders have to say that cutting taxes raises revenue).

But I respectfully suggest that they might want to reconsider their attack on Big Oil. After all, Big Oil is big us. And we need us.

A FINAL and unrelated thought: The whole world is poorer now because of the death last week of Bill Buckley. Along with Milton Friedman and Bob Bartley, he was a pillar of strength for free people, free society and free markets. His tireless preachments for the value of freedom started at a time when socialism seemed virtually inevitable, and ended at a time when free-market capitalism became an economic tsunami.

He is irreplaceable.

Again our media serves to mislead us. Whether I've been vocal about it or not I don't remember, but I've been a critic of Exxon's ungodly profits. I appreciate Ben Stein teaching me a lesson in reality...

[Sylvus]

Here's what I don't understand: how is it that, at times of record-high oil prices, the oil companies are posting record-high profits? Shouldn't the relationship between the two be more flat? They pay more for a barrel of oil, have a fixed (or, if anything, more expensive) cost for turning that barrel of oil into gasoline and other products, yet are setting records quarter after quarter for the highest profits ever achieved by any company in America. According to this article, in 2005 Exxon's revenue exceeded the GDP of Saudi Arabia. Doesn't that smack of price fixing?

And in the article, when he says that "This applies to Big Oil. Its profits are our income.", isn't that a bit misleading? Big Oil's profits are also reflected in increased prices on virtually everything and less disposable income for the average American. I thought oil prices were one of the things that can add to a recession, or maybe I'm putting the cart before the horse, I'm not sure.

Anyway, Ben Stein is probably a smarter guy than me, and I don't want anyone to think that I'm not all for Capitalism. The Oil companies should be welcome to make a profit, just not via shady means. And I kind of feel like we're getting raped by them right now. Am I alone on this one?

[Nick]

Doesn't that smack of price fixing?

The very existence of OPEC "smacks of price fixing" man.

[Wulfran]

Well first of all there are 2 major parts to the petroleum industry:

- upstream - which refers to the exploration and production of the oil and/or natural gas
- downstream - which refers to the refining and marketing of the finished products

Oil companies are generally classified as one of those 2 categories depending on what most of their business revolves around. Companies like Exxon-Mobil, Chevron-Texaco and Shell are whats referred to as "fully integrated" meaning they have both aspects in their business, and the upstream side is the division thats pushing the profits the hardest. The downstream side is a margin business and as Sylvos mentions is relatively flat. The upstream side is where people are making a killing because their price is based on the market value of the basic commodity.

Prices have been going up over the last decade because of increased demand in China and India but I think the entire market is overpriced because of the "fear premium" which is a fear of delivery interuptions from the Middle East because of the unrest. In a way its kind of bullshit in terms of its impact on the North American market because the vast majority of our consumption is produced by US and Canadian domestic sources, but the price that we're paying is a reflection of the world wide market. You could argue that while not necessarily their fault initially, Bush and Co. made the situation worse by creating the mess that is Iraq (no one liked or trusted him but at least Saddam had the lid on shit and the country wasn't a breeding ground for Al Qaeda and its clones). When you look specifically at Exxon-Mobil, the biggest criticism I would levy is their whole run-around, whining about the size of the fines and damages they are liable for because of their Exxon Valdez fuck up: almost 20 years later and the fuckers still don't want to cough up the cost of cleaning up their disaster.

[Markulas]

Money has to come from somewhere plain and simple. Despite what Ben may portray the average citizen does not benefit from an increase in Exxon Mobil stock prices because a. they dont own stock and b. cost of gas (food,plastic, etc.) outweighs the dividend given to the average consumer. I don't think the average American recently retired with $400 million like the former CEO of Exxon Mobil did.

I think a more interesting article is from http://www.miamiherald.com/news/nation/ ... 36587.html
I find it engrossing that Alito, who owns stock in Exxon Mobil, can rule if Exxon Mobil has to clean up 2.2 billion dollars worth of damage.

Also is this the same Ben Stein who is making this intelligent design movie: http://en.wikipedia.org/wiki/Expelled:_ ... ce_Allowed.

[Forthe]

How you can possibly justify special tax breaks for companies making these kinds of profits is beyond me. They should pay their fair share and not be paying off government so they can sherk their responsibilities.

[Noysyrump]

Money has to come from somewhere plain and simple. Despite what Ben may portray the average citizen does not benefit from an increase in Exxon Mobil stock prices because a. they dont own stock and b. cost of gas (food,plastic, etc.) outweighs the dividend given to the average consumer. I don't think the average American recently retired with $400 million like the former CEO of Exxon Mobil did.

I think a more interesting article is from http://www.miamiherald.com/news/nation/ ... 36587.html
I find it engrossing that Alito, who owns stock in Exxon Mobil, can rule if Exxon Mobil has to clean up 2.2 billion dollars worth of damage.

Also is this the same Ben Stein who is making this intelligent design movie: http://en.wikipedia.org/wiki/Expelled:_ ... ce_Allowed.

Yes same Ben Stein as "Win Ben Stein's money" too. He was a speach writer for Richard "Tricky Dick" M. Nixon before he became a comedian. Then went back to his old political life.

[Noysyrump]

How you can possibly justify special tax breaks for companies making these kinds of profits is beyond me. They should pay their fair share and not be paying off government so they can sherk their responsibilities.

Simple, they make soooooo much money, they pick who gets elected, then make thier in-govt puppets do what they say... See the movie 'The Aviator' for a good example of that.