A wake up call for all of us who want to actually move beyond petroleum (not you, BP). According to the latest Forbes Global 500 rankings, the oil and gas business remains the most profitable industry in the world. Just look at the top 6:
Exxon Mobil
Gazprom
Royal Dutch Shell
Chevron
BP
Petrobras
General Electric (#8) and Wal-Mart (#14) are two profitable companies that are starting to take energy efficiency and clean energy use seriously. But let’s not forget that many powerful companies clearly do not want us cured of our oil addictions any time soon.
On the positive side, at least an oil company has the decency to stop greenwashing and admit they could care less about our energy future:
Shell will no longer invest in renewable technologies such as wind, solar and hydro power because they are not economic, the Anglo-Dutch oil company said today. It plans to invest more in biofuels which environmental groups blame for driving up food prices and deforestation.
The announcement won’t really change the company’s investment strategy, considering they’ve been putting next to nothing into zero-carbon energy sources:
The company has predicted that by 2025, 80% of energy will come from fossil fuels and 20% from alternative energy sources. Yet it is spending just over 1% of its budget on alternative technologies. Over the past five years, only $1.7bn of the $150bn it has invested has gone towards alternative energies.
Exxon Mobil Corp. reported second-quarter earnings of $11.68 billion Thursday, the biggest quarterly profit ever by any U.S. corporation, but the results were well short of Wall Street expectations and its shares fell. [...]
Setting U.S. profit records has become commonplace for Irving-based Exxon Mobil. The $11.68 billion topped its own U.S. record of $11.66 billion, posted in the fourth quarter of last year. Right behind that was the $10.9 billion it reported to start 2008.
Exxon Mobil owns the record for at least the top six most-profitable quarters for a U.S. company, as well as the largest annual profit.
Record gas prices are “prompting Americans to drive less for the first time in nearly three decades, squeezing family budgets and causing major shifts in driving habits.” And more Americans feel the same way Sen. Carl Levin (D-MI) does about Big Oil:
Major oil companies “are getting away with murder” and “gouging” consumers as the price of oil continues to soar, Michigan Sen. Carl Levin said Thursday. […]
“The oil companies are getting away with murder,” Levin said. “Their profits are achieved at the pain and suffering of the American people.”
And what are the oil companies planning to do to change public opinion? Spend more of their massive profits on alternative energy research?
Nope. Instead, they plan to pump millions of dollars into a massive public relations campaign. The Washington Post reported last week:
Faced with a national outcry over the high price of gasoline and soaring profits for energy companies, the oil and gas industry is waging an unusually pricey campaign to burnish its image.
The American Petroleum Institute, the industry’s main lobby, has embarked on a multiyear, multimedia, multimillion-dollar campaign, which includes advertising in the nation’s largest newspapers, news conferences in many state capitals and trips for bloggers out to drilling platforms at sea.
The intended audience is elected officials and the public, with an emphasis on the latter. The industry is trying to convince voters — who, in turn, will make the case to their members of Congress — that rising energy prices are not the producers’ fault and that government efforts to punish the industry, especially with higher taxes, would only make pricing problems worse.
API has only said it would spend less than $100 million a year, but according to ad exec Bill Replogle, this “dwarfs” the amount most groups spend on issue campaigns.
At least the oil lobby isn’t setting the bar too high:
“There’s no expectation that the public will end up loving the oil and gas industry,” [API President Red Cavaney] said.
Exxon Mobil is the oil behemoth everybody loves to hate – except its shareholders, of course. It’s the most profitable company on the Fortune 500 for the fifth year in a row, raking in a record-breaking $40 billion in 2007 earnings.
U.S. households spent more than $100 billion on gasoline during the first quarter of this year, more than double the $40 billion spent in the same period just six years ago…
The survey conducted for the CFA found that 60 percent of respondents said rising gasoline prices caused them much or some hardship, with 27 percent reporting much hardship.
The oil industry is an easy target, but it is refreshing to think our next president might take a different tone with Big Oil. Here’s Hillary Clinton in Pennsylvania:
The president is too busy holding hands with the Saudis to care about American truck drivers who can’t afford to fill up their tank any longer.
[We] need a president who can stand up to Big Oil and big energy companies and say enough is enough.
Ok, enough rhetoric. Time to put some meat on those bones:
Clinton wants oil companies to contribute to a $50 billion fund to invest in alternative energy and for car manufacturers to increase fuel efficiency standards and for the government to tap into its emergency oil reserves.
Obama proposes a $150 billion investment over 10 years in clean energy and an 80 percent reduction in carbon emissions over 40 years.
The line of the day from yesterday’s House Energy Independence and Global Warming Committee hearing, courtesy of Rep. Jay Inslee (D-WA):
If you don’t put research dollars into [clean energy sources], is it going to come from the oil fairy? Somehow these new technologies are going to show up? We’ve got to put some real money into this, don’t we?
Video here:
Inslee points out that Exxon spends less than 1 half of 1 percent of its revenues on research “associated with clean energy sources.”
Here’s Big Oil’s response to calls for more clean energy investment, via CongressDaily:
ExxonMobil is investing $100 million this year in renewable energy and efficiency after posting more than $40 billion in profits last year, the largest amount in U.S. history.
“Mr. Chairman, putting more money into something does not necessarily mean more progress,” Simon told Markey.
Well, that’s true. But investing only 0.25% of revenues into something definitely means slow progress.
And here’s more from Exxon senior vice president J.S. Simon: “We’ve studied all forms (of alternative energy) and the current technology just doesn’t have an impact on this challenge that we’re trying to meet.”
Talk about nutty logic: Current clean tech doesn’t have an impact, so we shouldn’t invest in its future. I wonder if the first internet entrepreneurs ever thought to themselves, “No one’s on the internet, so we shouldn’t invest in its development.” It’s shocking to see how short-sighted the oil execs are.
Thankfully, it looks like Global Warming Chairman Ed Markey’s not through with Big Oil:
He promised to bring back the oil company executives to his committee later in the year. “This is an issue that is only going to grow,” he said. Markey thought gas prices now are “nowhere near what prices will be by Memorial Day.”
Watch Exxon senior vice president J.S. Simon spin, spin, spin at the House Select Committee for Energy Independence and Global Warming hearing today. Simon tries to explain Big Oil’s enormous profits, why their industry can’t afford to be taxed, and why alternative energy isn’t the future:
Simon’s intro started off on the right foot:
Because energy is so important, all of us have a responsibility to engage in an open, honest and informed debate about our energy future that is grounded in reality, and intent on finding viable solutions.
Ok, so far so good. Let’s have an honest debate, grounded in reality! Simon continued:
Our earnings, though high in absolute terms, need to be viewed in the context of the scale and cyclical, long-term nature of our industry as well as the huge investment requirements.
Well, so much for reality.
Earlier this year, Exxon posted the “highest quarterly and annual profits ever for a U.S. company,” pulling in $1,300 a second in 2007. They recently “regained the mantle as the world’s biggest company by market value,” and the company’s “2007 sales of $358.6 billion exceeded the gross national products of every nation on Earth except the U.S., Japan, Germany and 17 others.”
To try to spin these profit margins as anything but obscene is neither honest, nor informed.
Here’s Simon’s second point:
Stable tax and regulatory policies are essential to encouraging needed investments. Imposing punitive taxes on American energy companies, which are already paying record taxes, will discourage the sustained investments needed to continue safeguarding U.S. energy security.
He’s referring to legislation meant to roll back $18 billion worth of tax breaks for the oil and gas industry…OVER TEN YEARS.
$1.8 billion per year is a drop in the bucket for Exxon, let alone the entire industry. As the New York Times editorial board pointed out recently, “[A]n industry whose five biggest producers generated $145 billion in profits last year can easily sacrifice $1.7 billion in annual tax breaks it does not need.”
And Simon’s final point:
Third, all reliable and economic forms of energy are needed to meet growing needs. But the pursuit of alternative fuels must not detract from the development of oil and gas.
How on earth do tax credits for the renewable energy industry “detract” from oil development? Is Simon trying to play an April Fools’ Day joke on us? (If only he were…)
Big-time executives from ExxonMobil, BP, Shell, Chevron and ConocoPhillips will testify on Capitol Hill today. Rep. Ed Markey will grill them about the reasoning behind their opposition to tax break rollbacks. The The Hill reports:
Oil executives return to the hot seat Tuesday as a House panel examines rising gasoline prices and the industry’s opposition to efforts to repeal $18 billion in tax breaks. The new money would be used to pay for the development of renewable energy.
For the industry’s critics, the House Select Committee for Energy Independence and Global Warming hearing Tuesday is another indication of the industry’s waning clout on Capitol Hill, as was the House vote earlier this year that repealed tax breaks the industry now receives. [...]
[House panel spokesman Eben] Burnham-Snyder indicated the hearing would press the executives on their efforts to kill the House bill. “What we are trying to learn is which of these oil companies continue to defend the tax breaks.”
Rep. Markey discussed the hearing on CBS’ The Early Show. “We have to move beyond this oil economy,” he said. “We have to move to a renewable energy economy. … We can never get out of this trap as long as the oil companies want to hold us hostage to this old agenda.” Watch video of the interview here:
Unfortunately, The Hill also reported some bad news for the renewable energy industry. It looks like Sens. Baucus and Grassley may work to extend renewable energy tax credits for only one year:
Sean Garren, a clean energy associate at Environment America, said Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa), the chairman and ranking member on the Senate Finance Committee, were considering extending breaks for the wind and solar industries and for energy efficiency programs to just one year.
That would take the bill’s costs down to as low as $3 billion, which may mean Democrats wouldn’t need the oil industry’s tax breaks as a “pay-for.”
While advocates for the tax credits admit they may have to wait until 2009 to get a longer extension, some legislators aren’t giving up:
Sens. Maria Cantwell (D-Wash.) and John Ensign (R-Nev.) were writing a bill that would provide multi-year tax credits to the renewable energy industry.
Thought the headline might be just shocking enough to interest you. Too bad it’s completely ridiculous:
Exxon Mobil Corp. regained the mantle as the world’s biggest company by market value, overtaking PetroChina Co., ….
Exxon Mobil was valued at $455.8 billion today after rising 13 percent in the past year on record energy prices. …
Irving, Texas-based Exxon Mobil raked in $40.6 billion in profit last year, the biggest ever for a U.S. company. Exxon Mobil’s 2007 sales of $358.6 billion exceeded the gross national products of every nation on Earth except the U.S., Japan, Germany and 17 others.
Meanwhile, the Senate still hasn’t voted on whether to take away tax breaks for Big Oil behemoths like Exxon. Repealing these tax credits would pay for the renewable tax credits smaller alternative energy companies need to survive.
But as you can see, Exxon simply can’t afford to go without favorable treatment from our tax code.
