Big Oil - Behind the Scenes: The Real Cost to Society

On the face of it, this article is about climate change and the denial by Big Oil that it is occurring. Within it, however, are facts and figures showing capitalism gone wild with greed.

Careful reading will show the immensity of profits within the Big Oil industry. It should be remembered that profit is determined as what is left after all costs are satisfied. That includes all salaries, all costs of business, all planned exploration costs, and all costs to clean up and repair damage to the environment from oil spills. Profit is the icing on the cake, and that icing is costing the average citizen dearly.

It should be remembered that every penny of that profit ultimately comes from the pockets of the little guy – either directly in the cost of fuel or indirectly through higher manufacturing costs. There is another cost consideration as well – much of the oil removed from the ground is under public lands and is supposed to belong to every American citizen as part of the worth of America and the backing for the USD. A large percentage of that oil is exported and replaced with imported oil to increase profits. It is a brazen rip-off of American citizens on top of squeezing him harder and harder to maintain the upward money flow and profit.

This is a prime example of  Captalism Gone Wild With Greed and how it works to remove financial wealth from the masses and enslave them to government handouts. How much more would be in your pockets if these massive profits were limited to a more reasonable figure and the excess returned to the public as lower prices? How much more would you purchase with money in your pockets – spending that would increase demand, which in turn would increase jobs?

As I see it, this rip-off of our commodities for excessive profits is a major factor in the increasingly lower standard of living of the average American citizen and the increasing support of the American citizen for socialistic programs which are destroying America as we know it. Much more could and will be said in future installments of this blog, but for now read the article and see what is happening to our America while people are fighting over political ideology and failing to see the real danger to America occurring behind the scenes.

Yes, the bottom line of the UN Climate Report is compelling: Over 2,000 scientists worldwide conclude with 95-100% certainty that humans are causing climate change, that the damage is accelerating 10 times faster than the past 65 million years and soon we will self-destruct our civilization and disappear like dinosaurs, forever.

Still, forget the report. Why? Climate deniers ignored the last four reports. They’ll dismiss this one too.

Why? Because climate-science deniers like Exxon Mobil and Big Oil will now fight harder, deny harder, dig their heels in deeper to protect their turf, which is generating almost $200 billion profits annually. Plus Exxon Mobil alone in reinvesting $37 billion annually to explore and keep this profits pipeline accelerating well into the future.

But the real reason Big Oil and the rest of the climate-science deniers will be able to dismiss the new UN climate report is even simpler: Because, deep inside, all Americans are secret climate-science deniers ... all 300 million of us ... all 95 million investors. We’re all in denial. We’re all addicted to oil and oil profits. We will never give up our “drug,” the gasoline-powered automobile.

Admit it: The UN could have one billion scientists who are absolutely 100% certain that climate change will wipe human civilization off the planet, as happened to the dinosaurs, never to return ... and still all Big Oil’s deniers simply won’t stop denying. Why? Because they know average Americans will never consider living without our precious automobiles or the other fossil-fuel products we’re addicted to.

Seriously, even Exxon Mobil CEO Rex Tillerson, who now admits climate change is real, is also still America’s leading climate-science denier. He doesn’t trust all the “climate models to predict the magnitude of the impact.” Plus he believes people will “adapt to a sea-level rise.” Throughout history humans “have spent our entire existence adapting. We’ll adapt.”

Why? We’re addicts, addicted to oil. In a Charlie Rose BusinessWeek interview Tillerson was clear: “My philosophy is to make money. If I can drill and make money, then that’s what I want to do” to make “quality investments for our shareholders.”

Big Oil knows we’re addicted. So they keep pushing. It’s so easy. Addicts need a fix. Besides, as Tillerson put it, climate change is just another “engineering problem and there will be an engineering solution.”

In summarizing the UN climate report, the Center for American Progress says “warming is happening 10 times faster than any time over the last 65 million years,” reinforcing the conclusion that at this pace, human civilization will self-destruct this century.

Here’s some other highlights in ClimateProgress’s summary of the new UN climate report: “backed by 110 nations ... leading up to the release of the 1,200 page climate-change report ... the earth is ‘unequivocally’ changing ... humans have a large role ... scientists have 95-100% certainty ... 1983–2012 was the warmest 30-year period of the last 1,400 years ... the rate of sea-level rise since the mid-19th century has been larger than the mean rate during the previous two millennia ... 2,000 scientists worked on this report ... analyzed 9,200 peer-reviewed studies ... reviewed by government, industry, and environmental groups ... one of the most scrutinized documents on the planet.”

Still, we are all going to tacitly, compliantly, secretly go along with Big Oil and the rest of America’s climate-science deniers ... because we all have a shadow side that’s a secret climate denier, addicted to the oil “drug,” and can’t stop. Want proof? Here are eight reasons America’s 300 million people are so totally addicted to oil, gas and automobiles they are choosing to self-destruct rather than surrender their precious fix:

In a Washington Examiner op-ed piece earlier this year Bernie McGinn, portfolio manager of the Union Street Partners Value Fund, wrote: “In 2011, nearly 61 million American households had pension funds, including 401(k)s under institutional management. Some 52.3 million households, or 44%, owned mutual funds. Almost 49 million households had at least one IRA ... This puts higher risk onto already fragile 401(k)s and pensions ... our clients’ portfolios are invested in several energy companies including Exxon Mobil, BP and Transocean. When these companies are successful, our clients benefit.”

Vanguard is one of the largest fund complexes and a leading retirement investment option for many Americans. One of the companies Vanguard invests heavily in is Exxon Mobil and its 4.4 billion shares. In fact, “Vanguard is Exxon Mobil’s top institutional holder, owning around 211 million shares worth about $18.6 billion across its 170 separate funds. On average, 31% of publicly traded oil and gas company shares are held in public or private pension plans, nearly 21% in mutual funds, and another 18% in individual retirement accounts.” Yes, 70% of Big Oil firms are owned by Main Street Americans, and they aren’t selling.

When the millions of Big Oil shareholders see a drop in quarterly earnings, panic sets in. They fear the loss of their fix, their supplier, A few years ago a USA Today headline read: “Exxon’s record $11.7B profit still disappoints, stock falls.” Yes, record profits and still more is not enough in the Big Oil drama. Paul Davidson wrote: “Exxon Mobil reported second-quarter earnings of $11.7 billion, a record for any U.S. company, but profit fell well short of estimates, and its share price took a hit.” Looking ahead for the next few years, Exxon Mobil is currently planning to spend $37 billion a year drilling for new oil and gas reserves.

In recent years Americans have expected huge profits, dividends and income from the big five oil companies, Exxon Mobil, BP, Chevron, ConocoPhillips and Shell. Five years ago ABCNews reported record-breaking quarterly earnings from Big Oil. For the first time topping $50 billion in combined profit, adding that profits of such “unparalleled size have brought withering criticism from Washington and disgust from consumers across the country.” Today Big Oil remains a major buy-and-hold investment for climate-denying Americans, in spite of a recent downdraft, with profits of “just” $47 billion in the first half of 2013. Still, a winner, plus Big Oil still gets about $4 billion in tax subsidies.

A midyear report from the Center for American Progress’ reads: “Anti-Science Climate Denier Caucus: 113 Congress: Climate change is happening, humans are the cause, and a shocking number, almost 58%, of congressional Republicans refuse to accept it. 161 elected representatives from the 113th Congress have taken over $54 million from the fossil-fuel industry ... they deny what over 97% of climate scientists say is happening” and humans are the cause. Meanwhile, “their constituents are paying the price of their financial allegiance to the Big Oil and the fossil-fuel industry.

OpenSecrets.org tracks contributions, reports that “individuals and political action committees affiliated with oil and gas companies have donated $238.7 million to candidates and parties since the 1990 election cycle, 75% of which has gone to Republicans.” Last year the chamber spent more than $144 million on lobbying and grassroots organizing. No surprise they’re a voice for Big Oil science deniers. In a speech last year Tom Donohue, the chamber’s CEO, said the world has “1.4 trillion barrels of oil, enough to last at least 200 years ... natural gas, enough to last 120 years ... coal enough to last more than 450 years.” In a Rolling Stone response Bill McKibben said: “Too bad it’ll kill us in 50 years: We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn.”

Exxon Mobil CEO Tillerson makes $40 million a year. The company has 99,000 employees generating an average $5.2 million revenue. Earlier AOL reported oil companies were desperate to fill field jobs. To satisfy growing demand by 2020, the oil industry has to create 1.3 million new jobs: “Even if we are energy independent, we can’t hire enough people to keep it running ... kids fresh out of high school can earn $80,000 a year ... the average engineer’s salary is roughly $98,000 ... $127,000 for a research engineer ... geologist’s average salary of $100,000-$150,000. All climate-science deniers.

Exxon has bought a network of climate-science-denying professors. A 2007 Newsweek editorial reported that at an Environment Committee hearing Senator Barbara Boxersaid: “Warming of the climate system is unequivocal, citing a report by 600 scientists in 40 countries.” But immediately after, “a conservative think tank long funded by Exxon Mobil offered scientists $10,000 to write articles undercutting the new report and the computer-based climate models it is based on.” The climate-science deniers battle cry, sow doubt. So much for academic integrity and the search for truth.

Yes, folks, America is a nation of climate-science deniers, not just Big Oil but out there among 300 million average Main Street Americans who have a love affair with the automobile. And the 95 million investors who love profits, dividends and retiring on growth stocks like Exxon. That’s the American way of life.

And it won’t change easily. Not voluntarily, not in the ballot box. And probably not without a major and shocking catastrophe to awaken our conscience and trigger a historic paradigm shift. 

By Paul B. Farrell, MarketWatch