A little over a week ago Exxon’s stock value fell. This is the same Exxon that reported eleven billion dollars in net profit last quarter. By any angle examination, any other company that would report a profit of eleven billion dollars would be considered as doing considerably well. But not when Exxon does it.
Why did Exxon stock fall? Because the investors in the company were expecting Exxon to do even better than the quarter before where it reported eleven billion dollars. It isn’t enough that gasoline prices are about to top four dollars a gallon and the financial ripple through the economy is driving the cost of everything up with a rate of inflation that appears hell bent on reaching exponential status. It isn’t enough that people are already crying foul. Deep pocket investors want even more profits! It should have done better. Exxon should have made fifteen billion dollars or more. These investors are pretty much telling Exxon, why isn’t the price of gas already five dollars a gallon? Until you get your act together we’re going to have to take our money elsewhere. The more you make the more you’re expected to make.
A few weeks ago the CEOs of America’s most profitable petrochemical conglomerates went to capital hill to explain why they needed so much profit for their perspective companies. In order to make millions dollar investments into research for alternative fuels these companies need their billions of dollars of profits. For every dollar of profit these companies receive their research investment is about a tenth of a cent. The other ninety nine point nine percent has to go to the bottom line. Investors got to get paid.
Some people will make the theory that the government needs to stay out of the market place because the market will take care of itself. If people don’t want to pay four dollars a gallon for gas they will ride their bikes to work or they’ll buy cheaper cars or they’ll take public transportation or they’ll move closer to work, closer to the grocery store, closer to whatever.
But that’s not an option for a lot of people. I know a woman who is just barely keeping her head above water. She had to drive one way to drop her little girl off at school and then has to drive the opposite direction to get to work. Unless you live in New York, New York, the public transportation system in most cities is rudimentary at best, nonexistent at worst. Other people live in towns where their job is so far away they’d have to catch a Greyhound bus to get to work. Other people drive for a living so moving closer to work isn’t going to do much for their bottom line.
People who are hurting the most don’t have the disposable income to just move at the drop of a hat. People who struggle the most to cope don’t have the option of trading in their transportation to get something more fuel efficient. The woman I spoke of drives a little four cylinder about ten years old that gets about twenty five miles to the gallon. She’s already surrendered her cell phone and land line in order to make ends meet. She volunteers for overtime at her job at each and every opportunity. But the way the price of things keeps skyrocketing she, and many people just like her, is falling further and further behind. When things get too tough she will call her family for help. But the only thing these people will be doing is pooling their money together to give to the petrochemicals and their greedy investors.
Many of us don’t have the luxury of just saying no to the petroleum company. We don’t have the resources to change our arrangements so that we can move to reduce the length of our commute or to be closer to public transportation. We don’t have the resources to buy a twenty five thousand dollar hybrid to go from twenty five miles to the gallon to a stellar forty (saving about six cents per mile with gas at four dollars a gallon). We don’t work for companies that will give us thousands of dollars in incentives to go green. We are struggling. The long established market slogan of supply and demand means that when it comes to gas we pay whatever they demand for our supply.
But deep pocket investors have options. They have the disposable wealth that controls the fortune of companies that make eleven billion dollars a quarter. Investors are the ones that pressure companies like Exxon to squeeze every penny out of people struggling just to get by. These people are pushing corporate America to do everything they possibly can to widen the gap between the people who have and the people who have not. This is the social responsibility of capitalism. This is why people look to our government to force these conglomerates, and the people who invest in them, to pay higher taxes and to behave more responsibly.
Left to own devices people these days don’t have the social conscious to do the right thing for others. All we want is the most profit we can get for ourselves. The first person to become a trillionaire, with enough pocket change to buy his or her personal aircraft carrier group, will still work hard to get that second trillion dollars. It wouldn’t matter if that money came from forty dollars a gallon gasoline prices for the country. It wouldn’t matter if it grounded the economy to a screeching halt. It is human nature to get as much as possible for as little as possible at the expense of everyone else.
Exxon made eleven billion dollars last quarter. BFD! If Exxon wants to stay a viable player they’d better be working on making that trillion dollar quarter.
I just barely remember the energy crises of the seventies. I remember sitting in long lines and queuing up to a gas pump. I remember hearing my parents and the news talk about the gasoline shortages and the effect it has on prices. I remember seeing gas stations with signs on the pumps saying that gas is limited to five gallons per customer. I remember President Jimmy Carter trying to calm the nation’s collective anxiety by saying that we are all in this together.
Back in the seventies, we could point to the oil producing nations who made a collective decision to show gas gulping nations, the United States specifically, how vulnerable they are. A new sheriff was in town and if people wanted to play then people had to pay. Oil spigots that were running at full tilt were being regularly turned off or only partially opened. There wasn’t enough oil to go around. In the first crisis, gasoline that was originally selling in the lower thirty cent range doubled in a relatively short time. When the second crisis hit, the price of a gallon of gas jumped even higher. Gas pumps weren’t designed for to charge the unheard of price of more than a dollar a gallon and for a while we were buying gasoline in liters in order to charge the higher fees. We all were being squeezed and we were being squeezed and we all were feeling pressure.
Today we have another energy crisis. Seven years ago when the Middle East was relatively stable and the value of the dollar was much stronger in the global currency market, oil was trading at something like twenty dollars a barrel. Now, oil is trading at five times that price. We have endured a five hundred percent jump in wholesale oil prices in just seven short years. That’s the kind of thing you just have to endure when you put greedy and self serving men who made and who plan to make their living on oil in the White House. The price of gas is knocking on four dollars’ door in many places around the nation. In other places the price of gas has bust through the door and haven’t looked back. Oil companies are making tens of billions of dollars in net profits and oil executives are earning grand lottery sized bonuses that rival the gross domestic product of many countries around the world. In this energy crisis, we are not in this together. The price of fuel is driving up the price of everything. While most Americans are feeling the extra burden of fuel prices, food prices, utility prices, etcetera, some Americans are doing extremely well
Earlier this week, President George Bush made the claim that one of the ways we can get our hands around this energy crisis is to open Alaska to oil exploration and drilling. Alaska is sitting on top of a multi billion barrel oil reserve that makes the oil company executives drool like Pavlov’s dog with an extraordinary salivary gland. Opening up the Alaskan wilderness would make gas cheaper and solve all of our problems. It would send a message to the oil producing countries that we are serious about this energy situation. By sacrificing Alaska we won’t have to make any changes to our living habits. We can continue buying our Escalades, Escapades, Expeditions, Hummers and Vipers. We don’t have to do anything and we can be happy knowing we have given the oil companies access to America’s last oil reserves.
The problem isn’t that we don’t have enough oil to buy. Unlike the seventies, you can take your Dodge Ram 1500 Supercrew 4X4 with the dual fuel tanks down to the local gas stations and buy as many gallons of fuel until your heart is content and your wallet is exhausted. There is no fuel shortage. The reason oil is costing so much is that there are people who are investing in oil speculation. With the dollar plummeting against other world currencies and real estate no longer being the rock solid safe investment it used to be, people with money to invest is buying up oil in order to make money and consequently keeping it from flowing freely in the two player market of suppliers and demanders. The oil market is now a three player game of suppliers, investors, and demanders. How else can we explain oil companies making their billion dollar windfalls when the rest of the country is struggling?
And perish the thought of expecting an oil company showing more environmental responsibility than absolutely necessary. No matter what environmental regulations are set the oil companies will hire a ton of lawyers, lobbyist, and environmental engineers willing to sell their souls to the highest bidder to find or create the legal loopholes to do as little as possible. Exxon/Mobile is still fighting against any further responsibility for the Valdez spill that decimated Prince William Sound. How dare the Alaskan public hold them responsible for hiring an alcoholic captain with an oil laden tanker to navigate through an environmentally sensitive area! Lord knows big oil has never given the public any reason to doubt their desire to do the right thing if an accident occurs.
Opening up the Arctic National Wildlife Refuge of Alaska to the oil companies and expecting the price of energy to drop would be like opening up a chicken coop to foxes and expecting the price of chicken eggs to drop. All it would do is give a handful of people that much more oil to hoard and that much more money to make. The price of oil won’t change with the addition of more oil sources because we are not having an oil shortage. Besides, it would be years, maybe even decades, before we would see a drop of this extra oil come to market. The only message this country would be sending to the other oil producing countries would be that we refuse to make the changes to curb our gluttony for petroleum. The traditional market of supply and demand is not at play here. Don’t believe everything a fox who continues to have close ties to people in the oil business tells you.