Profit and Loss
From Today’s NY Times:
Exxon Mobil Profit Sets Record Again
Exxon Mobil delivered its strongest performance ever last year, earning a record $40.6 billion in net income because of surging oil prices, the company said Friday.
The figure, a 3 percent increase from the previous year, exceeded the company’s own record for profits at an American corporation, set in 2006, and is nearly twice what it earned in 2003.… Exxon, like most oil companies, has benefited from a near-doubling of oil prices last year. In New York, oil futures rose from a year-low of about $50 a barrel in early 2007 to a peak of nearly $100 by the end of the year.
The company recorded annual sales of $404.5 billion, up 7 percent from 2006. It had $20.9 billion in capital and exploration expenditure, up $1 billion from the previous year.
Chevron, the second-largest American oil company, reported that its fourth-quarter net income rose 29 percent, to $4.87 billion.
It has been a great seven years and counting for the oil industry. In the first week of W’s presidency, he held a closed door summit meeting with the leaders of the corporations who had backed his play. Primary at the table were the oil guys, led by the Halliburton Brown & Root boys. The picture that they ran at the front of the Times that day frightened me. W and his posse were striding forth from the room, having flung open the double doors, and I have never seen a happier group of suits in my life. These guys looked like they had just been handed the keys to the city…and they had. All it took to keep the promises made in that room was the lives of 150,000 Iraqis, 2/3 of them civilians, 3,000 and counting of our brothers, sisters, daughters and sons, and the economic infrastructure of the country.
This is the first war in history that has been catered, with all primary services provided by private industry. While there are as many contractors as American soldiers in Iraq, and many of those, at least the tools who went over for some quick bucks, have died as well, the profits for catering the war must even put those oil numbers to shame.
It is nearly impossible to conceive of how many ways we have all paid to put these obscene profits in the pockets of those happy suits. Let's elect someone who can put a stop to this insanity.One of my students recently referred to our system of government as a "Kleptocracy"...a democracy stolen from the people. What will it take to steal it back?


Comments (18)
What is your point ? Do you think that the government should force the oil comapanies to sell gasoline at a cheaper price? What price do you think would be fair? $1.00/gallon , $1.50 a gallon, $2.37/ gallon ?
Just curious as to what you think should be done.
Comment #1 Posted by: Brian | February 1, 2008 08:15 PM
"This is the first war in history that has been catered, with all primary services provided by private industry."
As far as I know the government does not have construction companies, telephone companies, sewer companies, hospital construction companies, school building etc, etc. I seem to remember WWII a few companies that helped us win that war, Faribanks-Moorse diesel power plants for the fleet submarines, Westinghouse, GM, Ford, ect, ect.
Comment #2 Posted by: Brian | February 1, 2008 08:53 PM
Brian,
I would not care if gas was $5.00 a gallon. Perhaps people would get out of their cars or carpool. For you to ask those questions leads me to believe that I failed to communicate clearly. In short, some few have made profit at the loss of thousands of human lives and the countless suffering of mothers and fathers and sisters and brothers. It is just unconscionable.
It is really nothing new, I suppose. The powerful have always used the poor as fodder for their cannons. It seems the lives of the masses mean no more to those in power today than they did to any historical despot. But today, the powerful, save a few, are not people. They are corporations, entities whose only ethic is profit.This doesn't seem to be analogous to WWII. It was not only a different war, we are a different nation.
It is also unsettling to imagine all that might have been otherwise done had not we invaded Iraq. Just imagine for a moment what investments might have otherwise been made, had the same money been redirected to saner and more compassionate cause. Imagine what a billion dollars a week might buy. Imagine the suffering that might have been relieved had we listed out profits in a different sort of column.
Here is an interesting graphic for those of you, like me, who have a hard time wrapping your minds around several hundred billion dollars.
http://www.crunchweb.net/87billion/
Comment #3 Posted by: Dennis Rice | February 1, 2008 09:13 PM
Maybe you don't care if gas is $5.00 a gallon but I know a lot of people who do care. I would like to send my kids of college instead of spending all of my money on increased food cost and increase in everything else I happen to buy that arrives on a truck ! Not to mention the increase cost of me driving my bees up to the San Joaquin Valley for almond pollination.
Great solution you have - $5.00 a gallon gas.
Fortunately there are millions of Iraqis that do not feel the way you do. Fortunately Bush created a a situation where a whole nation of people are begining to see a life where they can prosper and live without fear of being slaughtered by a ruthless dictator. That is something that you liberals will never be able to reverse because now that these people have had a taste of freedom and prosperity you will see Iraq slowly but surely emerge as a properous nation and a friend to our nation. It's already happening, they are begining to take over the security roles and over time more and more oppertunities will open up for the individual Iraqi. Not that you care, you would have them still under Sadam and his jackboot henchmen. The insurgents are getting increasingly desperate now, the latest I heard is that they are using retarded people with bombs strapped on them to kill innocent women and children. These are the type of people you are protecting, killers that would do things like that. I don't know how you can stomach it.
Comment #4 Posted by: Brian | February 1, 2008 10:38 PM
Brian, you are delusional.
Since its so great over there, why don't you head on over and pollinate some bees?
Do you know that more than 80% of the Iraqi people wish for the days of Saddam, and say that they were better off?
Do you know that upwards of 80% of the Iraqi people believe it is legitimate and honorable to kill Americans?
Do you know that more than 80% of Iraqis want the U.S. out?
Do you know that your "terrorists" and "insurgents" are just regular Iraqi people who want to have their country back?
Do you know that the Iraqi body count is, at minimum over 150,000 from our invasion and occupation; and, by less biased, international counts, over 1,000,000?
Question: Under whom were more Iraqis killed? Saddam, or Bush?
Question: Under whom was the per capita Iraqi GNP higher, Saddam or Bush?
Brian, I can't wait to see what you would do if the Chinese invaded us to liberate us from the despotic murderer Bush. I assume you, along with Bush and Cheney, would join the Chinese, and condemn the rest of us as "terrorist insurgents".
What makes me sick about so-called "conservatives" is that everything they have is the result of the sacrifice of liberals. All "conservatives" have done is resist and tear down what others have created. Face it Brian, all those you champion are gross failures and worse, who have only made the world a lesser place.
Comment #5 Posted by: Anonymous | February 1, 2008 11:55 PM
Dennis, I think your student's reference to kleptocracy may have a slightly different meaning than you cite. Here is a definition from Wikipedia that is closer to how I understand the term:
"A kleptocracy (sometimes cleptocracy) (root: klepto+kratein = rule by thieves) is a government that extends the personal wealth and political power of government officials and the ruling class (collectively, kleptocrats) at the expense of the population. A kleptocratic government often goes beyond merely awarding the prime contracts and civil service posts to friends (a common feature of corrupt governments[citation needed]). They also create projects and programs at a policy level which serve the primary purpose of funneling money out of the treasury and into the pockets of the executive with little if any regard for the logic, viability or necessity of those projects."
The Republicans under Bush and Cheney have reorganized our system so that the federal government constitutes a means of transferring the wealth of working people - collected through taxes - to their favored cronies, and themselves (i.e. Halliburton). One could interpret their entire program as being based on a parasitic quest for pots of money to be transferred to themselves and their cronies. Thus, Social Security - a big pot of money - must be "privatized". Health care must be "private" - except for prescription drugs, which can be purchased only at a non-negotiated asking price with tax dollars, since the money is going to cronies. War itself must be privatized - why pay soldiers to protect the no-bid contract kleptocrats on the ground when you can pay cronies to pay mercenaries?
The war in Iraq is a great way to have a completely non-accountable transfer of cash to their cronies. And as we have seen, they have been issuing debt to raise funds to themselves, while cutting current taxes. Why go to the trouble of transferring tax money into your pocket if you are just going to pay a portion right back to Uncle Sam? Better to issue debt to generate the funds, so future generations can pay for it. Meanwhile, cut the taxes on the current transfers to you and your cronies, so you can keep every penny of the stolen money.
Thus, foreign policies that drive the price of oil to $100/barrel, while terrible for the people, are sound policy for a kleptocrat whose cronies are oil companies and their executives.
When a natural disaster like Katrina hits, it makes sense for a kleptocrat to spend tax dollars on tens of thousand of mobile homes manufactured by cronies; and put thousands of mercenaries in the streets. But, as we saw, no way can any cash assistance be given to people.
Similarly, when the economy starts to collapse, and it looks like the pots of money are shrinking quickly; a kleptocrat at that point will see the soundness of returning a little money back to the people, so the golden goose does not die.
I think your student is astute. If the guiding philospophy of Bush, Cheney et al is understood as a morally bankrupt kleptocracy, with no ambition other than getting all the money, wherever it is, for themselves and their cronies, it is amazing how many of their programs, policies and actions suddenly make sense where they never did before.
Comment #6 Posted by: Anonymous | February 2, 2008 12:16 AM
Why do people have to even get gas at Exxon or Mobil? If you goto the mall, and look at the 2 gas stations across the way, one is an Arco, and one is a Mobil. Arco's price for 87 is 2.94 and Mobil's is 3.34, now tell me why you choose to continue to support these price gouging sons of bitches. STOP GOING TO THESE GAS STATIONS EVERYONE, ITS NOT THAT HARD.
Comment #7 Posted by: Scott | February 2, 2008 12:14 PM
Scott,
Some people seem to think that the more expensive "name brand" gas is of better quality.
Comment #8 Posted by: Tanya | February 3, 2008 10:53 AM
Exxon's 2007 Tax Bill: $30 Billion.
I'd like to see solar generate this kind of tax revenue.
http://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion?source=side_bar_editors_picks
Comment #9 Posted by: Brian | February 6, 2008 09:14 PM
Yeh, nobody mentions how much tax the oil companies pay!
Comment #10 Posted by: Anonymous | February 7, 2008 06:52 AM
Yeh, nobody mentions how much in subsidies and royalties the oil companies either refuse to pay, or how much the government lets them off the hook for! Yeh!
U.S. Has Royalty Plan to Give Windfall to Oil Companies
Oil Company Revives Suit on Avoidance of Royalties
Comment #11 Posted by: Tyler | February 7, 2008 08:58 AM
Who cares? The government gets the money anyway in the form of taxes. And and a rate of around 41% of income. If the oil companies are profitable it directly benifits government (us).
Comment #12 Posted by: Brian | February 7, 2008 09:07 AM
"Who cares? The government gets the money anyway in the form of taxes."
Not really Brian.
Keep in mind, in most countries that have oil in the ground, the state by right owns it for the benefit of the people. Oil companies have to negotiate concession arrangements to extract it, which usually take the form of revenue sharing or production sharing. This is separate from taxes, which may or may not be due as a result of profits made in the country.
So-called "profit sharing" deals, where the state gets a share of profits (which is what it sounds like you are equating to the income tax), have been rejected in country after country, and in those cases where countries had agreed to such deals, in many cases they are just cancelled (see Bolivia, Ecuador, Venezuela for recent examples) as being manifestly unfair. Why? When the deal is profit sharing, the company has incentive to show reduced profits. So they spend a fortune on "writeoffs" and "costs" in the form of payments to subsidiaries, executive and contractors that amount to transfer of fat sums to themselves. Oil-rich countries have found themselves presented minimal amounts in royalties under these deals, though the company extracts and sells billions in oil.
For a common sense example closer to home, consider the record deal that labels historically gave artists. Under "net" deals, where royalties were based on profits, a record company might sell millions of records and the artist gets a royalty statement for pennies - because, after "costs", the record company has no "profit". Good agents always negotiate royalties based on gross, which is much harder to manipulate than net. Many would argue the government should do no less for us, when it is negotiating royalties on our collective resources.
Unfortunately, as pointed out in Comment #6 above, that is not the philosophy of the current administration.
The bottom line is, we should care alot about low-royalty giveaways of our finite natural resources, for many reasons. Among those reasons, we will NOT get the money back in income taxes. Giveaways are giveaways, and the fact that some of the giveaway may trickle back in taxes is small consolation.
Comment #13 Posted by: Anonymous | February 7, 2008 12:24 PM
Excuse me but that is a retarded argument. You're siting Venezuela as an nation we should emulate? The oil companies are the ones taking all the risk, they are the ones that have to invest in all of their equipment and man power. The governmnet doesn't own the land it is owned by the people, except in places like Venezuela. I guess I should be paying the government a royalty for every pound of honey I make because my bees flew to government land and govnerment flowers and blossoms.
Comment #14 Posted by: brian | February 7, 2008 01:40 PM
Brian, Venezuela was cited as an example of a country that for many years did what you advocate: "profit-sharing" deals with the majors.
The result of that kind of endless cozy giveaway of the nation's patrimony to well-connected foreign oil companies and plutocrats was/is ... you guessed it, Chavez.
So no, Venezuela is not a nation we SHOULD emulate. But it is a nation we might well end up emulating if we keep allowing the kinds of corporate giveaway practices exemplified by the current administration to go on.
Brian, do you see any difference between giving away a nonrenewable, extractive resource held in public trust, on public lands, to private interests, and allowing bees to pollinate flowers and trees? Are those exactly the same to you?
Also, just curious Brian: Do you pay anything to a private orchard owner, for example, if your bees pollinate their trees?
Comment #15 Posted by: Anonymous | February 7, 2008 02:13 PM
No, they pay me for pollination. It's not a give-away. Its something that the company has to work to get, it's just like mining, it is advantages for the government to encourage companies to develop resourses, what you're talking about is communism.
Comment #16 Posted by: Brian | February 7, 2008 02:23 PM
The price of gas has been driven for the last few years by the artificial shortage of refining capacity here in California. There are now 12 refineries here in CA while there used to be over 30 twenty years ago. The remaining refineries produce all the gasoline from all the oil companies for California. These companies all collude to maintain an artificial shortage that drives up prices and profits. Also, the oil companies don't want more refining capacity, so they get an extra bonus by claiming the reason there aren't more refineries is because of environmentalists and California's preoccupation with air quality. So basically, if you buy gas at Exxon because you think it "better" quality, just realize that you are getting the exact same gas that can be had for less at say Thrifty. They all use the same refineries.
By the way, I wonder how much profits Exxon/Mobil's 8 subsidiaries in the Caribbean posted. Oh, that's right, they don't have to tell us because it's all offshore. I guess they didn't have to pay any taxes on any of that.
Comment #17 Posted by: spk | February 7, 2008 03:31 PM
I'm not saying that the oil companies are saintly, I'm sure they leverage things their way when ever possible. We do have a refining bottleneck that aggravates the supply and if you remember the MTBE poison scandle, which was pushed by the sierra club, the oil companies were happy to go along with adding the so called oxygenated additive MTBE to the gas because they were the ones who invented it and they got paid big bucks for it. Many at the time were saying there were problems with it but it took ten years to get it out of the gas, in the meantime it has poisoned ground water all over the place. I'm not really sure how the offshore profits work, I guess what ever you sell in the US is taxable in the US. But if we make it so unatractive for businesses to do business here at home then we will be driving these businesses away, it seems to me.
Comment #18 Posted by: Brian | February 7, 2008 07:22 PM