It's About Time Big Oil Started Defending Itself

Bill Steigerwald
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Posted: Jun 10, 2008 12:09 PM
It's About Time Big Oil Started Defending Itself

As any recent television viewer can attest, the American Petroleum Institute - the main lobbying group for the oil industry - has launched a huge ad campaign designed to tell Big Oil's side of the $4-a-gallon gasoline story.

Aimed at one audience -- voters -- the multimedia, multimillion-dollar propaganda blitz is a necessary antidote to the misinformation and false charges we constantly hear about Big Oil from Big Media and our duly elected demagogues.

We've all heard about the alleged sins of Big Oil, the handy media-made pejorative for the world's largest oil and gasoline manufacturers:

It controls/manipulates the world energy market. Its six "supermajors" -- multinationals like ExxonMobil, Royal Dutch Shell, BP, Chevron -- are exceptionally evil and rapacious corporations that are responsible for skyrocketing oil and gasoline prices.

They are uniquely and grossly profitable. They deserve to have their "excess" profits taxed and their robber-baron bosses scolded - if not publicly waterboarded -- by Congress.

A few weeks ago, when the Senate Judiciary Committee grilled five U.S. oil executives, some senators treated them like captured war criminals. Demagogues like Dick Durbin scolded them for their high salaries, threatened them with windfall profit taxes and suggested brainless, environmentally correct ways for them to reinvest their companies' oil revenues.

The Big Oilmen defended themselves ably, mainly because they actually knew what they were talking about.

The oil execs warned, correctly, that government intervention will only make things worse - not that Sen. Durbin and his fellow grandstanders gave a care. And they called on Congress, futilely, to allow more drilling and exploration for domestic oil on the vast swaths of federal land in Alaska and off America's shores that by law are off-limits to oil and gas development.

Many Americans have heard by now the truth that oil companies pay far more dollars in taxes each year than they earn in profits. And that the oil industry's average net profit margin -- 8.3 percent last year -- is lower than Big Tobacco and Big Beverage (19.1 percent), Big Pharma (18.4 percent) and Big Banking, Big Insurance and Big Media.

But during their show trial, the execs delivered some other pertinent factsin their defense:

* U.S. companies, while huge, are actually relatively small players in a gigantic global oil market. They can compete directly for only 7 percent of available reserves while large government-owned companies like Petroleos de Venezuela own and control 75 percent of world supply.

* As Stephen Simon of ExxonMobil humbly pointed out, his hated behemoth -- America's largest oil and gas corporation -- accounts for only 3 percent of global oil production and 6 percent of global refining capacity. It has only 1 percent of global petroleum reserves - 14th in the world.

Big Oil can take care of itself in Washington - and it always has. It has bought and paid for all the lobbyists and political patrons it needs. Big Oil is not perfect. And it doesn't deserve a dime in government subsidies or special tax breaks.

But with worldwide oil demand up, oil harder to get at and oil prices at $130-plus a barrel and maybe climbing, America needs Big Oil now more than ever -- no matter what environmentalists and liberal senators feel or think.

So instead of pandering to voters' ignorance, maybe Washington politicians should try to do something useful for once -- like helping Big Oil discover, extract and deliver the energy all earthlings still need to make their lives better.