The $36 Billion Magicians

Question: How high will gas prices go? Answer: As high as the oil executives want them to—unless we take action.

Nobody can make our hard-earned cash disappear faster than the oil companies. With prices for barrels of oil rising, this has been the perfect time to line the pockets of oil companies...to the tune of $36 billion in the first three months of 2008 alone. That’s right, the top five oil companies—Exxon Mobil, Chevron, BP America, Conoco Phillips and Shell—earned $36 billion
in three months.

Exxon alone earned $39.5 billion last year in profits. It was the single most profitable year of any U.S. corporation in history. They are on pace to break that record by another $10 billion this year. What is the U.S. government doing about it? Absolutely nothing! In a recent Senate hearing, the top executives of the five biggest oil companies were asked to explain the extraordinarily high cost of gasoline today. What did they say? “The fundamental laws of supply and demand are at work,” said John Hofmeister, chairman of Shell Oil. “Profits have been huge in absolute terms,” said J. Stephen Simon, a VP for Exxon, “but they must be viewed in the context of the massive scale of our industry.” Are these guys comedians? Simon went on to say that “high earnings in the current up cycle are needed for long-term investments.”

“Current up cycle” is the direction of Simon’s paycheck. He earned over $12.5 million as a vice president of Exxon last year. The funniest part of this act before Congress was that the oil company executives acted like helpless victims to the Middle East. The senators acted tough in their questioning, but what did they accomplish? Nothing at all. Why would they? Oil companies donate over $100 million each year to the campaigns of political candidates.

So what can we do about it? How can we prevent gas from going to $5, $6 or even $10 per gallon? We must take action, and there are two big steps we can take.

First, we can write to our congress representatives. They have put caps on the profits of dozens of other industries, and they can do it to oil companies. They can also put pressure on automobile manufacturers to release more electric or alternative fuel cars. Did you know that electric cars have been around since 1832 and that they outsold all other cars combined until 1900? They did not have the vibration, noise and smell of gasoline-powered cars. By 1910, some electric cars traveled over 100 miles on a single charge. They enjoyed success into the 1920s, with production peaking in 1912. The technology was there 100 years ago and is even better today.

So, why aren’t we all plugging in our car at night and filling it up for about $5 dollars. Because electric cars require little maintenance and it would hurt the profits of auto manufacturers and the big oil companies. Forgive me while I take a moment to shed a tear for them.

Second, after putting pressure on Congress, we must limit our use of oil by carpooling and using alternative forms of transportation, such as trains, bicycles and electric scooters. We can even walk more. When demand goes down, price goes down.

One way we’re saving fuel at ABC is by offering our employees four-day workweeks. With about 75 employees, that’s a savings of 300 round trips to work a month. If all of our members gave their employees four-day workweeks this summer, I estimate that we could make about $10 million in oil company profits disappear. I’d like to see David Copperfield do that.

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