September 12, 2012
What Oil Companies Do With $375 Million Each Day
by Rebecca Leber, by Eric Lipton, and by Alyce Santoro
The Big Five oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — are slated to announce their 2012 second-quarter profits. These companies, all of which rank in the top 10 of the “Fortune 500 Global Ranking,” will reveal billions of dollars more in profits. After raking in $375 million in profits per day in 2011, and $368 million per day in the first three-months of 2012, their combined profits reach $1 trillion from 2001 through 2011.
The five biggest oil companies received a record $137 billion profit in 2011, despite reducing their oil production.
Per minute, these five companies took in $261,000 — more than 96 percent of American households make in one year.
These five oil companies received $6.6 million in federal tax breaks every day.
In 2011, the three largest domestic public oil companies spent $100 million of their profits each day, or over 50 percent, buying back their own stock to enrich their board, senior managers, and largest shareholders.
The entire oil and gas industry spent on average $400,000 each day lobbying senators and representatives to weaken public health safeguards and keep big oil tax breaks, totaling nearly $150 million.
Each CEO of the Big Five companies received an average of $60,110 in compensation per day last year. On average, their pay jumped 55 percent in 2011. Exxon CEO Rex Tillerson’s compensation came close to $100,000 per day last year.
Despite ranking as some of the most successful companies in the world, big oil and gas companies continue to receive $4 billion in tax breaks each year.
The House of Representatives is on track to collect a record amount of oil industry contributions this cycle, having already reached 2008 and 2010 levels. And these are direct donations only — it does not include Super PAC spending or other campaign assistance.
Fact checkers have thoroughly debunked the anti-clean energy ads from oil company groups. Both Politifact and the Washington Post Fact Checker have given the ad their worst ratings of “pants on fire” and four “Pinocchios”, respectively.
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JJS: Most people notice only the size of oil profit, not the kind. Oil companies do earn some money from extraction, transporting, refining, and retailing, but they reap their biggest harvest merely from the value of oil in the ground. Norway charges 80% of the world price to extract their oil yet oil companies still pay it because the other 20% is rewarding enough. Imagine if every government had the guts of Norway; oil companies would be about one fifth their current size and the public treasury that much richer. In contrast, the US Government bends over backwards to wait on oil companies, hand and foot.
Drillers in Utah Have a Friend in a U.S. Land Agency
The energy companies’ lobbying efforts extend beyond Washington to officials across the West, including the office of the Bureau of Land Management in Vernal Utah, population 9,000. Bureaucrats there are allowing oil drilling near Desolation Canyon, a national historic site known for its pristine wilderness and white-water rafting.
The Bureau of Land Management, part of the Interior Department, is the nation’s biggest landlord, controlling 248 million acres, including nearly half the land in Utah. Charged with protecting public lands while exploiting their resources — for mining, drilling, timbering, ranching — the agency usually acquiesces, after confronting fierce industry pressure and political realities.
In nine years, the Vernal office has approved 555 new oil and gas wells a year, nearly three times the number in the previous decade. Agency employees who often shuttle between business and government rarely issue drilling-related fines for environmental or safety violations and have pushed to ease rules about well sites near sensitive wildlife habitats.
The field office also sided with business executives to kill a proposed agency study of the effect of thousands of oil and gas wells on area air quality. Agency managers then helped push for an industry-controlled study instead, despite protests from Environmental Protection Agency officials.
“Achieved our goal of diverting B.L.M.,” industry lobbyists wrote. The study, released in 2009 predicted no “unacceptable effects on human health.” By early 2010, air monitors near Vernal registered ozone levels among the worst in the United States.
“If you hear anybody on TV saying that somehow we’re somehow against drilling for oil, then you’ll know that they either don’t know what they’re talking about or they’re not telling you the truth,” candidate Obama said. “We’re drilling all over the place.”
This spring, contractors were building a natural gas pipeline through nearby Nine Mile Canyon — nicknamed the nation’s longest art gallery — where American Indians once pecked stick figures into sandstone walls.
Local resident Ms. Hansen, noting her husband’s family owns an oil rig firm, said, “People do get so excited about the money, they overlook the environment. We all breathe the air here. They need to remember that.”
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JJS: Besides critiquing corporations wannabe reformers also cite customer consumption.
How to Break Up With Big Oil: A “Complex” Relationship
The most abundant “green” technology is available right now: our collective ability to maximize efficiency and reduce waste and demand for fossil fuels.
During WWII, citizens voluntarily used less gasoline, fabric, metal, rubber, paper, etc, and grew small backyard “Victory Gardens”. “Use it Up, Wear it Out, Make it Do, or Do Without” was the motto of the day.
The Great Law of the Iroquois, AKA “The Law of the 7 Generations”, requires that all decisions be made with consideration for how our actions would affect a person born seven generations into the future. This law we can follow ourselves.
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JJS: While people should reduce waste, the remaining legitimate need for energy is still enough to despoil the world. Fifty years ago, when we were using half as much energy as now, we were still wreaking environmental havoc. Cutting consumption can make the problem more manageable but it can’t make the problem go away.
To do that, we need to draw power from elsewhere. To switch technologies, we must quit subsidizing the old ways and instead charge them for their pollution. Further, rather than subsidize what we think might be a good idea, we could get better results if we de-taxed wages and dividends and let competing entrepreneurs and investors determine what technology will best meet our energy needs and stay within the ecosystem’s constraints.
Most crucially, we must recover the socially-generated value of resources like oil and land such as lots downtown. That will shrink oil companies and their ilk down to human-scale where they can’t wield so much political power in detrimental ways. It’ll also make it possible to de-tax our efforts (re above). Given how much we all spend for oil and land, recovering that revenue stream would probably generate a surplus that government could dispense as a dividend, a la Alaska or Aspen CO. In that geonomic context, overlooked basement inventors could more easily offer their alternatives to burning fossil fuels.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .