Thursday, August 10, 2006

Now it's time to get angry with big oil.

The news has been declaiming the profits of the "big oil companies" in absolute dollars, Exon makes $10B profit in 1st quarter, for instance. That doesn't really tell us whether those oil companies are really bad guys or not, does it? What does that profit represent in terms of percentage of sales, or return on investment?

If they have been limping along in the past selling at a loss and are now selling at a profit of, say 10% on sales, does that makes them the bad guy? I'm not suggesting that is the case, I'm just pointing out that the news reports are not telling us. Investments in the oil business are huge, and continuing investment is big as well. What return on investment does that profit represent?

But then I read that BP is having to shut down the Alaska field and why. Pipelines that have not been maintained for sixteen years and have (big surprise) developed a leak. Okay, now I'm ticked off. They have been making record profits and I no longer care what their percent of sales or return on investment is, they have not even been performing routine maintenance in an environmentally sensitive area.

The chief executive of BP is on television being interviewed and is asked about the record profits and about "stewardship" in the Alaska fields, and he just brags about how quick they were to shut down the field after the leak and environmental damage was discovered. When pressed further he went on and on about how he had apologized to Alaska and to the nation.

Congress is opening more of this area for drilling. We don't want apologies from the oil companies, we want responsible management.

1 comment:

  1. Anonymous3:26 PM

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