Quick Hits: Does Big Oil Get a Bad Rap?

Andrew Jeffery  Apr 02, 2008 9:15 am

Quick Hits: Does Big Oil Get a Bad Rap?
 
Profit inquiries miss the mark.
 

 
The easy trade, so to speak, is to harangue big oil for its big profits. But there’s another side to every bet.

Executives from Exxon Mobil (XOM), Chevron (CVX), ConocoPhillips (COP) Royal Dutch Shell and BP Ltd. took the stand yesterday in defense of $123 billion in 2007 net income. Opportunistic politicians pried into the rationale for the $18 billion in tax breaks the government allots these highly profitable firms.

Conventional wisdom sees Americans paying record gas prices while politically connected fat cats soak up our hard earned money and cries fowl. Conventional wisdom rarely sees the other side of the story.

With risk comes reward. Few industries are more wrought with risk than that of crude exploration and extraction. Oil companies must plunge into war zones (Africa), dictatorships (Venezuela) and miles beneath turbulent waters (Caspian Sea) to do business. Shouldn’t this be a financially rewarding endeavor?

The more important question is why Americans ignore environmental destruction a few thousand miles away for the right to drive a Hummer (GM) to the grocery store. Crude exploration hurts local economies and communities more than it helps, despite industry claims to the contrary. Big oil needs reform, but concerns over a few rich CEOs should be secondary to the devastation caused by our thirst for fuel.

For more on oil prices, check out Hoofy & Boo's always astute report.

 
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Comments (6) See All Comments »
04-02-2008, 11:40 am
Tell the democrats to stop taxing oil companies, and let them drill.
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04-02-2008, 2:49 pm
So let me sound of first by saying this is a great site, I read it everyday and it has really helped me make some great decisions with my retirement.

But Mr Jeffery, what are you suggesting? That because the oil business is risky, it sh
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04-02-2008, 4:57 pm
Hi Shane,

Thank you for the comments. The tax breaks are certainly questionable, but with all the complicated politics involved, even assuming for a second Bush wasn't in the white house, the government would end up being involved
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04-09-2008, 1:01 pm

Then why don't you do some research before mindlessly repeating government propagnada?

While you're at it maybe check out what passes for democracy with our buddy Columbia where they have election but only after they k
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04-09-2008, 1:48 pm
Americans drive big gas-hog SUVs because they're told to by lifestyle ads and because gas is cheap. A typical San Diegan grad student might pay $2000 a month in rent but only $200 for gas.

All the externalities of pollution, cor
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