Sympathy for the Devil

Steve Chapman’s column about the tragic travails of the multi-billion dollar oil companies nearly brought me to tears this morning. Mr. Chapman says taxing big oil's windfall profits would be unfair and even -- choke -- un-American.

In his defense of the beleaguered oil industry, Mr. Chapman assured his readers that the prices at the pump rose to record levels last fall only because of an interruption caused by Katrina and that the oil companies are helpless to control the world price of crude.

Such a sad story.

It moved me so much that I decided to ask my congressman to help... Maybe the government could allow the heads of big oil to draft our nation’s energy policy. But then I remembered that recently disclosed White House memos show that executives from the big oil companies had closed-door meetings with the Bush Administration’s energy task force in 2001 – meetings that oil industry officials denied when testifying before Congress last month.

And when I thought back to the price hikes “caused by” Katrina, I recalled that the pump price of gas in Chicago skyrocketed even before the hurricane reached the Gulf Coast. And when the hurricane had passed, the price of gas -- which had spiked to well-over $3 per gallon in just a matter of days -- went down again, only gradually, over the course of months.

Quick to rise, slow to fall -- funny how it always works that way.

But what about Mr. Chapman’s claims that the oil and gas business just isn’t all that profitable? Even Mr. Chapman’s numbers show that the petroleum industry nets more profit per dollar of sales than other U.S. companies. And the Cato Institute’s statement that oil and gas sector’s return on investment over the last third-of-a-century was lower than that of the rest of the U.S. economy is rendered moot when you examine the oil giants’ more recent history.

In the last reporting quarter, Exxon-Mobile set a U.S. corporate record with a net profit of almost $10 billion. In that same period, Royal Dutch Shell PLC reported its best quarterly results ever – Shell’s profit rose 67 percent to $9.39 billion. Shell’s Chief Financial Officer explained, “We are capturing the benefits of high oil and gas prices and refining margins.”

So, while Mr. Chapman is correct that the oil companies don’t control the price of crude, they do control the profit margin on each barrel of crude that is refined into gasoline, diesel and jet fuel. And that margin is profitable indeed.

So, in the end, I wiped my eyes and decided to save my tears for the seniors and families on fixed incomes who will be struggling to heat their homes and fill their gas tanks this winter.

I think Mr. Chapman’s friends in big oil will, somehow, manage to get by.