The outrageous pension collected by Exxon Mobil's retiring chairman Lee Raymond -- nearly $400 million, counting all the perks (and not to be confused with Bill Gates' remuneration, which I believe is well deserved because his entrepreneurial genius has enriched the nation) -- should be a wake-up signal to the country: The oil industry is out of control, and we have to bring it to heel. We need a federal commission to ride herd on the industry in general, and a national oil company to develop oil and gas from federal land for the good of the country instead of the oil industry.
Oil is too vital to the national interest to permit its continued exploitation for the private greed of oilmen, acting as handmaidens of the OPEC oil cartel. As readers of these postings know well, oil executives have been cheerleaders and apologists as the sheikhs have relentlessly pushed oil prices to the stratosphere. In the past two years, as the price has doubled to more than $70 a barrel, the increase in revenues to Exxon Mobil alone has been more than $97 million a day, or $35.4 billion a year, while Exxon's costs to ship and refine the oil have risen only with inflation. Small wonder that Exxon raked in $36 billion in profit last year -- and so much for the managerial "genius" of Lee Raymond (see Exxon's Lee Raymond, "Steward of the Free Market System" 4/15/06). And yet, all told, the company paid him a mind-numbing $686 million in the 12 years he presided over the "God Pod," as Exxon's executive suite is known. That's $144,573 per day. And like all the rest of the oil profits, it came from our pockets.
Here's what we should do to stop being exploited:
• Just as air safety and telecommunications are too important to be left unsupervised -- and just as the profiteering of the railroad barons led to government regulation -- we must set up a federal agency to keep an eye on the oil business. The new commission should have the power to monitor everything oilmen do, including their relations with OPEC suppliers, lobbying activities, and royalty and depletion allowance calculations.
• The agency must also control the futures trading used to manipulate the price of oil (see Oil Prices Being Pushed Ever Higher By Manipulating Oil Futures Trading 4/05/06) and gas. On March 7th of this year the attorney generals of Illinois, Iowa, Missouri and Wisconsin cited the lack of oversight of financial markets -- not supply and demand problems -- were to blame for skyrocketing natural gas prices. They urged Congress to increase regulation of financial trading markets which they found vulnerable to abuse and manipulation.
• The agency must further oversee the in-house transfer prices that may have been used by oil companies to maximize depletion allowances and minimize royalty payments.
• Since the industry, in the opinion of many, places its own self-interest well before the greater national good, it has forfeited the public trust that is essential if it is to develop our greatest potential fossil fuel resource: the oil shale deposits on federal land in the western states. We must set up a federal trust to control those resources, and a national oil company to oversee their development. Where private-sector companies are invited to participate royalties must be set high and without depletion allowances. It would be a forfeiture of the public's trust and our government's responsibility to the electorate if our elected officials once again permitted a great national resource to become another oil patch boondoggle.
• All income accruing to a national oil trust or a national oil company from oil/gas production derived from public/federal lands should be set aside for programs that would replace fossil fuels -- including mass transportation, ethanol derived from various harvested crops, wind and solar power, hydrogen, clean coal and research generally, especially in nuclear waste storage and disposal.
• We must pass a surtax on oil company earnings to cover the extra profits of monopoly pricing (see Taxing Oil's Monopoly Profits 3/14/06). Existing royalties on oil and gas from federal land and offshore deposits must be reviewed and, where legally possible, raised to recapture these monopoly profits.
As all these measures take effect, big oil's profits will become more realistic -- or at the very least be directed to benefit the nation and help it deal with its affliction and addiction. The hundreds of billions now being needlessly spent to enrich the oil patch will be used to level the playing field in our dealings with the oil pushers. And if Lee Raymond's pay package proves to be the eye-opener that makes people angry enough to force this sea-change, even $686 million for one fat-cat manager will have been a bargain.