Transportation | May 05, 2008 |
Are Oil Companies Evil?
Not sure how many Glenn Beck fans we’ve got out there (I’m hoping none), but a month ago, the CNN pundit wrote an article about how we should love our big oil companies, instead of demonizing them. After all, oil companies “give” us so much (by selling us oil), and the sizable (18 cent) gas tax doesn’t give us anything (except roads).
While reasoning may not be Mr. Beck’s forte, I decided maybe I ought to step back for a second and try to objectively re-evaluate my feelings about the oil industry. After all, the oil giant is apparently mass-producing light and efficient lithium-ion batteries for electric and hybrid vehicles, and has licensed out some proprietary catalysts to help build a greener rubber band.
Still, for the most profitable company in the history of the United States, that just doesn’t seem like much of a nod. And the shareholders—including a few descendants of the crotchety old robber baron that started it all—seem to agree with me.
So what are your thoughts? Will big oil always do more harm than good, or will it eventually adapt to greener technologies?
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Comments By Readers
Oil companies are a convenient target of the left and your comment about them being the most profitable is only one side of the story. Their margins are 10-11% which if you are talking Microsoft, Cisco, Intel or a credit card company that would mean executives and board members would be out on their collective butts. In addition to the 90% of revenues that they pay out in terms of refining costs, capital equipment, payroll, etc, they create a hell of a lot of taxes that Uncle Sam seems to like beyond the state and federal gas taxes. We have oil reserves but some choose not to drill for them. Meanwhile other countries continue to search for new sources while our policies limit our options.
Let's see:
BP destroys the Gulf of Mexico, probably killing entire ecosystems. People sick, entire local economies decimated.
They posted $5 billion in profit in the last quarter (yes, the last quarter).
And to top it all off, they still receive subsidies.
Oh yeah, and they keep raping us at the pump.
So yeah, they're evil. And if it wasn't obvious in 2008, it should be now. ;)
That's way more clever than I was epexcting. Thanks!
Economics for dummies:
Companies produce goods to sell for profit. Oil companies spend billions of dollars each year exploring, gaining land rights, drilling, refining, and shipping to make a few billion more total by selling the final product.
You think BP was happy with that oil spill? That one mistake leaked 4.9 MILLION barrels of oil into the gulf of mexico and killed 11 of their own offshore employees. For everyone else, this meant a month or two of grimy fish and tar balls. For BP, it meant losing 11 valuable men, 490 MILLION dollars worth of oil, a multi-million dollar deepwater rig that had to be built in South Korea and shipped in over several weeks, and, from that ONE failure, their corporate stock was HALVED. It took one disaster on one rig to almost ruin a worldwide oil titan.
As for the rest of the oil industry, let me let you in on a little secret. There's a little something called taxes. Individuals pay it, and so do coorporations. Taxes is taken as a percent from total REVENUE, not PROFIT, and those evil oil companies have to pay their tithes to uncle sam just like the rest of us. Usually, tax is just a small percentage though, right? Let me tell you how big a difference it actually makes. For the past few decades, for every dollar in profit those evil oil companies made, 2 dollars of could-have-been profits were paid in taxes, and in the world of business, this means the consumer has to take up the slack.
Long story short, for every cent exxon/shell/whatever makes off of you at the pump, the government makes 2.
If you want those fat cat oil companies to sell gas at lower prices, you should actually be pushing to lower coorporate taxes and permit more drilling and refining. If profit margins are higher for oil companies, they can produce more oil without spending more money to drill for it than they make off of it. More production means more volume and lower prices, thus, the end product is that the oil companies are making even more money and you are paying less at the pump. Where I come from, that's called a win-win situation.
Oh, and btw, those wretched oil companies provide jobs in very poor countries, and believe it or not they DO give charity. Back when Mobil was operating near the four corners area, they thought they would make life easier for the local native american school children by making shaded bus stops with tin roofing at the reservations where they could sit in the shade while waiting for the bus. Within 5 days, locals had stolen the tin roofing. Yeah, if solving poverty and misery in the world was as simple and straightforward as giving food and a leg up, we would have seen the end of it long ago. Even the oil companies want a better world.
Oh, and for the record, I don't care if other people make more money than me. What matters to me is what 'I' make and the standard of living 'I' can realize off of it.
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