Three Strikes Against John McCain

Just issued today, by the Congressional Select Committee for Energy Independence and Global Warming:

With a new record quarterly profit of $14.83 billion, Exxon Mobil and the other top four oil companies are now on track to reap more than $150 billion in profits in 2008, shattering last year's record haul. Meanwhile, investments in renewable energy continue to lag with the world's most profitable company, and as an industry as a whole.

The up-tick in profits for these companies has not been reflected in the health of America's economy, with figures released today showing a slide in U.S. GDP for the third quarter of 2008, indicating a recession. Profits have increased for the companies, even as prices have slipped.

"Our economy is suffering from many factors, but one of them is the price of oil and our nation's dependence on it," said Rep. Edward J. Markey (D-Mass.), Chairman of the Select Committee on Energy Independence and Global Warming. "Instead of just accepting the $150 billion in oil profits as status quo, our country needs a plan like Senator Obama's to invest $150 billion in renewable energy alternatives. Because for these oil companies, there are hundreds of billions of reasons why they want to keep the status quo intact."

Exxon's prior profit record was $11.68 billion in the second quarter of 2008. Shell Oil announced profits of $8.45 billion in the third quarter, and BP announced $10 billion over the same period, an increase of almost 150 percent compared to the same period in 2007. All told, the five top oil companies in the world--Exxon, BP, Shell, Chevron and Conoco--made $123 billion in 2007. Current profits now put these companies on track to make more than $150 billion in 2008.

The main thrust of Senator Barack Obama's (D-Ill.) plan to achieve American energy independence and create 5 million new jobs is to invest $150 billion over 10 years in clean energy development. Exxon, by contrast, is spending just $10 million a year, a figure they admitted to Chairman Markey at a hearing on April 1 of this year, and in documents released to the Select Committee after the hearing. Chairman Markey also challenged the head of the top five oil companies at the April hearing to invest 10 percent of their profits in renewable energy development, which would roughly equal the yearly commitment Sen. Obama is making, according to current profit projections. All five companies refused.

What does Exxon do with all that money, you may wonder? They give it back to their shareholders, and re-invest the rest, into more oil exploration, meanwhile pouring millions of dollars in advertising to falsely position themselves as pioneers in renewable energy development. Exxon, and the other oil companies have no incentives to change. In 2007 alone the Bush administration thanked its friends in the oil industry with $17 billions in subsidies. And made it hard for alternative energies to get a few crumbs.

Of great concern to me, has been John McCain's enthusiastic support for "Drill, Baby, Drill". The fact that we hold only 3% of the world's oil reserves, and yet consume 25% of it, makes it clear that we cannot drill our way out of our current energy dependence. Other than satisfying the greed from a few oil barons, this position does not make sense. It certainly goes contrary to the interest of the majority of the American people, on at least three fronts: the economy, national security, and global warming.

Comments

[Edouard]

Another brilliant post Marguerite....

You're absolutely right in stating that we won't drill ourselves out of this problem. No: alternatives - mostly renewables - and a lot of energy efficiency would help us out.

It was great to watch Sen. Obama thinking this way in his infomercial... Now, it is your job as Americans to do what is necessary. I am confident....

[topgunna]

Wind and solar are nice ideas, but the technology just isn't there yet. At this point, they're a nice supplement to traditional power sources, but they are way too unreliable and inefficient to stand alone. Think about it - peddling an exercise bike requires the same motion as a windmill, but a single unit only produces enough energy to run the clock/mileage tracker. Even then, you're out of luck once you get tired.

Solar is probably more promising in the long run, but the return on investment isn't presently where it needs to be to be competitive with oil. The sun emits radiation over a lot more frequencies than the current state-of-the-art is capable of utilizing. Also, we haven't yet developed a way to store this form of energy, it can't stand alone with being supplemented by fossil fuels. There's plenty of growth potential in solar though, so I wouldn't be surprised if we made some strides over the next 30 years or so.

Lastly, the case for man-made global warming is a lot weaker now than it was 10 years ago, thanks to a couple fatal divergence problems. There's certainly no empirical evidence to disprove athropogenic global warming, but the falling global temperatures we're seeing definitely indicate that carbon dioxide's role is WAY overstated.

There are many better arguments for why people should vote for Barack, but this one is way too problematic.

[topgunna]

I don't like the idea of importing oil from dictatorships like Venezuala either, but I'm not sure how to handle that unless we drill domestically. Oil is sold on the global market, and the U.S. is obviously not the only buyer. If we pay a premium to only buy our oil from benevolent countries, it certainly benefits those countries, but it doesn't hurt the dictatorships (since they can still sell to other buyers in the global market).

As far as reserves, the U.S. has 3% of the world's PROVEN reserves. It's been a long time since we've explored. Shouldn't we at least look into it? If nothing else, we'd at least eat into the market share of some of those evil dictators, and drive prices down domestically.

[topgunna]

The huge profits Exxon Mobil is raking in are more a function of the high price of foreign oil, which makes up the largest chunk of their input costs. As an industry, oil/energy companies make 8% profit. The nominal profits are so large due to the enormous input costs. But that is a perfectly reasonable and necessary profit, as companies need to maintain working capital to avoid falling into liquidity traps. The banking collapse is a prime of example of what can happen to an industry with a lack of available capital.

Also, a large chunk of that profit goes to the government anyway. In fact, Exxon Mobil alone will pay more in tax revenue to the federal government than 50% of all American workers. That doesn't even begin to consider their competitors, or the various state and local taxes.

Secondly, 5 million new jobs? The entire energy industry only employs about 500,000 Americans currently. How can any sensible energy plan result in an eleven-fold increase in the size of the industry?

[JohnnyBoyyy]

You're soooo right, Ms. Manteau-Rao, it's a NO brainer!

FIVE million plus good paying jobs that can't be outsourced.
Exportable clean energy technology and equipment.
Reduced import of oil that puts the US at a severe national security risk.
A serious attack on global warming and our childrens future.

AND NO - the almighty oil barrons WILL NOT do the right thing without political pressure - look how Wall Street greed brought the world to crisis without government regulation!

Exxon Mobil's annual profit of 40 BILLION DOLLARS - and only 10 MILLION DOLLARS invested in clean energy development - that's .025% (NOT 2.5% - LESS THAN THREE HUNDREDTHS OF ONE PERCENT)!

I can guarantee you that the Oil Barron's CUTE lil PC ads shouting their pioneering renewable energy effort is MORE than 10 MILLON DOLLARS!

PLUS they share in 17 BILLION in subsidies! (subsidies for what COWBOY???)

The Audacity of these companies!


This Is OUR Time - This Is OUR Moment.

Obama/Biden '08/12!!!

[topgunna]

I'm sorry, there are a number of errors/midleading points in this essay.