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44 comments on Oil execs speak to the Senate today

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Twilight on November 8, 2005 - 2:07pm Permalink | Subthread | Comments top
I've tried to say this in several ways, but I'll give it another shot:

The oil industry is too big and too essential to exist separately from the US government.  The futures market may determine the price of oil.  The stock value may be determined by the stock market.  But the cost side of the equation is a made up number.  Over so many decades the taxpayers have had to pay for environmental clean up, military and intelligence efforts, use of public lands, etc.  Where do these costs show up on the P&L?  The US government needs the oil companies to succeed, and big oil needs the US government.  And the consumer has little choice but to buy the product, or much influence on the price - who does determine the price at the pump?  What part of this sounds like a free market?

I hear how these companies struggled during the lean years - sounds to me like they would have gone bankrupt had they been charged the full costs of what was borne by the taxpayers.  So why is it that now they're entitled to huge profits?  I think it is absurd to treat these entities as if they were separate from the US government, and equally absurd to pretend that they operate in a free market.  This is simply the wrong model to apply to this business.  And if the losses were limited at various times, what is wrong with limiting the profits as well?

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PaulS on November 8, 2005 - 3:25pm Permalink | Subthread | Parent | Comments top
Maybe this isn't so much right-and-wrong as practical. During the lean years, the government only did the bare minimum to avoid bankruptcies, and not enough - as we are seeing now - to maintain a robust industry with reserve capacity.

Now, on a percentage basis, the supposed monster profits still seem trivial and stingy compared to the 10-20% - and tax-free, mind you - that any Joe Doakes can make simply by sitting on his bottom snarfing Twinkies while hoarding oil-guzzling suburban real estate. So either one allows profits commensurate with the government-guaranteed returns and lavish tax benefits on real estate, or else one nationalizes the energy industry and has the government run it. In the latter case, I suppose, we will all soon travel by Cuban-style camello, or maybe just oxcart.

The third option is business as usual - investment only in energy consumption, and, Real Soon Now, massive shortages. Then again, for all I know, maybe the Great Shiftless Moron Mass really do want to spend their lives waiting in gas lines, as suggested by Tim Haab not too long ago.

Regardless of the option chosen, the politicians do not possess a Magic Money Tree. If oil products are getting more difficult to locate and extract and refine to ever-stricter standards, then Joe Doakes is eventually going to have to put the Twinkies aside, get off his bottom, and work more productively to pay the extra freight - or else he can do without. There is simply no avoiding it.

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44 comments on Oil execs speak to the Senate today

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