Thursday, May 22, 2008


Wednesday BP America Chairman Robert Malone, Shell Oil President John Hofmeister, Chevron Vice Chairman Peter Robertson; ConocoPhillips Executive Vice President John Lowe, and ExxonMobile Senior Vice President J. Stephen Simon testified before a Senate hearing on oil prices.

The Senators did not cover themselves with glory, choosing instead (as is their wont with high-profile issues) to engage in sound-bites, ad hominems, and a general pandering to the gallery.

Senator Lahey (D-VT) showed great interest in their salaries, and waxed prolific about (“the asterixed”) oil companies’ profit margins. “People we represent are hurting, the companies you represent are profiting…” Total non-sequitor…

Sen. Arlen Specter (R-PA) said there was no explanation for "why profits have gone up so high when the consumer is suffering so much…” Another non-sequitor..

Senator Dick Durbin (D-IL) said "Is there anybody here that has any concerns about what you're doing to this country with the prices that you're charging and the profits that you're taking?” & “Where is your corporate conscience?"

Senator Dianne Feinstein (D-CA) denounced them for “… making record profits… quarter after quarter… and apparently have no ethical compass about the price of gasoline…”

OK, so clearly the major determinant of gas prices is the price of crude. From 2000 - 2007 the price of crude contributed 48% to the price of a gallon of gas (when oil averaged $39/barrel), rising to 58% in 2007 (average oil price of $68/barrel) and 72% now (oil at >$130/barrel).

Also, in spite of their “outrageous”, “huge” profits their profit margin is approximately 9% - lower than those of magazine publishing at around 35%; application software companies at 22.3%; shipping companies at 22.3%; drug manufacturers at 17.8%; insurance brokers at 16.4%; railroads at 13.9%; cigarette companies at 13.7%; domestic telecom services at 10.6%; water utilities at 10.2%, and many others.

With oil prices soaring ExxonMobil made a profit of approximately $40 billion on 2007. However, even back in 1998 with oil at $10 a barrel and gas below $1/gallon Exxon had a profit increase of almost 13% to $8.4 billion…

This blogger has two thought while watching this:

If you were to investigate oil company donations to politicians, this blogger would not be particularly surprised if a very strong positive correlation was found between those most vociferously denouncing the greedy, amoral, oil companies & the largest recipients of oil company largesse…

This blogger also wonders what is going through the minds of the executives as they sit there receiving their rhetorical flogging by the senators… What would they like to say in response if they did not have to hold their tongues? Perhaps something along the lines of “If we could make vehicles that could harness and be powered by all the hot air that emanates from the bloviating on Capitol Hill, then perhaps oil would fall back down to $10/gallon!”

Big Oil defends profits before irate senators
Oil Executives Grilled Over Soaring Prices

Note: it's probably fairly clear which photo this blogger feels the caption above fits best... Not for the first time, see also "The Chamber." (from Feb 2002)

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