I don’t get it. Why are we angry at the oil companies? Is it because of high gas and heating oil prices ? But wait: The oil companies don’t set the world price of oil. That’s set in trading rooms in banking houses in New York and London and Hong Kong by young guys who make zillions each year. There is absolutely no evidence that the oil companies are colluding to fix prices at artificially high levels. Those prices are set, again, by traders with Ferraris, not by John D. Rockefeller, who has been dead for many years.
Yes, the price rose a lot after Katrina, but that’s because producing and refining capacity fell off drastically after the storm damage and thus the traders, sensing shortage, drove up the price. The oil companies benefited from this rise in price, but there have been plenty of times when the price has plummeted and the oil companies have taken it on the chin. The oil companies do help set the price at the pump and they set it based on the world price–which, again, they do not set-- to replace the oil they use up. That is a standard way of setting prices and not at all a conspiracy. When the world price of oil falls, pump prices fall too and they have fallen dramatically since Katrina.
Are the oil companies making obscene profits? No, as a general rule they have profits far lower than bankers or pharmaceutical companies, and even below the average of large companies. And anyway, profit is not a dirty word. This a free market country that is supposed to like profits. The oil companies’ income goes to search for more oil, to refine it, to get it to market, and to pay its stockholders, overwhelmingly small investors and pension funds, a dividend. Is it bad to pay a dividend to a widow?
And what about this: when I buy gasoline that has to be brought from Nigeria or Libya or Indonesia at great risk, refined, had huge taxes on it, and then brought to my gas station, it costs less per ounce than a lot of the bottled waters at my local grocery store. Why doesn’t anyone mention that?
How about oil executive pay? Is it criminally high? Well, it’s a lot more than mine. But it’s a joke compared with wall Street pay and Hollywood pay, and what the heck does any movie star do that’s even remotely as valuable as powering this whole nation and keeping the wheels of the nation moving?
I have the sneaking suspicion that this hatred of the oil companies is largely for the reason that teenagers hate their parents: because they are so dependent on them, they respond with anger. But Senators are not supposed to be teenagers and neither are newspapers.
Let’s get smart. The oil companies are not our moms and dads. They’re in business to make money. But they do it fair and square, and without them, we would be in very bad shape. Let’s keep an eye on them, but let’s be darned grateful they work as well as they do.