The Big Guys of Big Oil got drilled by the Senate yesterday in a joint hearing of the Senate Energy and Commerce committees. There lots of questions, primarily looking into whether or not their companies were guilty of "price gouging" during the 2005 Hurricane Season.
Big Oil turned in some Big Profits in the third-quarter, a 62% jump to about $25.9 billion; ExxonMobil’s quarterly profit was record setting. The other side of that story is that Big Oil’s profit margin—the difference between what they earned, and what it cost them to operate—wasn’t so big, just south of 10%.
Big Banking had a profit margin of 20%. When does their congressional inquisition begin?
Some members of Congress have called for a return of the Windfall Profits Tax, funneling the money to lower-income consumers to help them with energy costs. Holy Communism, Batman, Joe McCarthy is spinning in his grave!
Unless the Oil execs had spoken up in defense of their profits, the fact that the industry invests billions in developing new sources of energy regardless of the market price of oil or the level of the industry's profits, would be lost in the murmers of the gathering crowd.
That’s just another example of Washington’s myopia when it comes to realistic planning, and their shallowness of thought on the matter. That’s a gentle way of stating that these guys are pretty stupid. Not to mention hypocritical.
Forgotten in the pompous circumstance of Congress’ current witch hunt in the oil patch is the fact that this same august body has lacked the spine and foresight to stand up to environmentalists (who use electricity, too), effectively neutering Big Oil’s ability to do in this country what it does best: find and produce sources of energy domestically.
There are special interests everywhere you look.
Big Oil has been tarred and feathered before because of its lobbying efforts on Capitol Hill. There should be an equal amount of pitch and bitumen to go around for the environmental lobbyists, too.
Just as pork is the other white meat, environmental lobbyists represent the other special interests in Washington. And it is those special interest groups who have successfully thwarted efforts to drill for oil off the east and west coasts of this country for years, as well as the Alaskan National Wildlife Refuge.
Last night House leaders scuttled opening the Alaskan wildlife refuge to oil drilling. Why? Fear overcoming resolve in addressing America’s energy issues… They also dropped from the budget plans to allow oil and gas drilling off the Atlantic and Pacific coasts.
So the irony is that the politicians pandering to the wishes of “Tundradites’” are now complaining about supply-induced pricing…when they are just as much a part of the problem.
What you’re seeing and hearing in the comments of people like California Senator Barbara Boxer and others on the panel is their knee jerk reaction—not to the price of gasoline, because really, they can well afford it. Their beating the brow of oil execs like Lee Raymond is in response to the shrillness factor in the voices of their constituents.
And they don’t get it.
In response to suggestions for a federal price gouging law, Federal Trade Commission Chairperson Deborah Majoras said it "likely will do more harm than good. While no consumers like price increases, in fact, price increases lower demand and help make the shortage shorter-lived than it otherwise would have been," she stated in yesterday’s hearing.
Oregon's Democrat Senator Ron Wyden responded by saying, "that's an astounding theory of consumer protection."
Not really.
It’s supply and demand. And whether you’re discussing the price of oil in America, or the price of eggs in China, that’s a fact, Jack...er, Ron.
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