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Friday, August 29, 2014

OUR OIL COMPANIES ARE DOING IT TO US AGAIN

I today received an e-mail from a colleague indicating that our oil/gas companies are in trouble:


The subtitle was:  Returns diminish as energy companies resort to higher-cost, higher-risk hydrocarbons.  The message was that 127 of the largest oil and gas companies are running out of cash.  To quote:  "They are now spending more than they are earning."

Okay, something is wrong somewhere, for why are their profits still astronomically high?  So I looked further into this and sent the following response to my friend:

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Dear Mr. X:

About that soaring oil debt problem, yes...but.  In 2013 the Big 5 oil companies ranked first (Exxon Mobil), seventh (Shell) and eighth (Chevron) of all all global companies in profits.  Here is a paragraph from an article entitled, "With Only $93 Billion in Profits, the Big Five Oil Companies Demand to Keep Tax Breaks":

The 2013 profit totals are in for the big five oil companies—BP, Chevron, ConocoPhillips, Exxon Mobil, and Shell. Their financial reports indicate that they earned a combined total of $93 billion last year, or $177,000 per minute. (see Table 1) After years of oil production declines, the big five oil companies actually increased their total production* in 2013, predominately due to BP and ConocoPhillips almost doubling their total production. The companies’ higher oil production yet lower profits indicate that it is becoming more expensive to produce oil as the number of newer, easier, and cheaper fields shrink. This is why, despite their outsized earnings, the oil companies are not only fighting to keep their tax breaks but also lobbying to lift the crude oil export ban. But doing so could hurt working families, our economy, and our energy security. Instead, we need to invest in cleaner transportation alternatives.

In other words, this "decline in profit" matter is now their key to maintaining the annual $2.4 billion tax break they get from Congress.  This "break" only was enacted in 2004.  They are also using this same excuse to allow them to sell domestic oil on the world market, which, as you know, is around $10/barrel higher.  This has not yet been approved by Congress, but it looks like it will happen, which will mean an additional $10 billion to our our annual gasoline bill.   The average annual compensation of the top exec for the Big Five is $20 million.  Oil companies spend $45 million/year on lobbying and, in addition to the above, will no doubt insure their immunity from any future carbon tax. 

Aloha.

Pat


P.S.  I'll leave your name out, but will use the above as my blog posting later today.

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Anyway, this is Friday, so have a great weekend.  The University of Hawaii Rainbow Wahines open their volleyball season against Ohio tonight and the Rainbow Warriors are in position to get crushed by #25 Washington tomorrow, which is the first real weekend of college football.  Well, there is always hope, which peaks for all teams the day before the season starts.  Pro football begins next (not this) Sunday.  I have eight fantasy football teams this year.


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