This morning on Meet the Press, Tim Russert interviewed Shell Oil’s President John Hofmeister; ConocoPhillips Chrmn. & CEO James Mulva; & Chevron’s Chrmn. & CEO David O’Reilly. Throughout the interview I could not help but feel these three stooges had the impression America is full of a bunch of dumb shits.
The first is when they tried to explain their profits. What is interesting is that this is the exact same arguement they used to Congress:
MR. HOFMEISTER: Well, we are in the business to make money, but most of that money goes right back into the business. You know, we do owe our investors a dividend and a return on their investment, but beyond that it goes right back into the business
I am a business owner and fully understand being in business to make money. If the reward of making a profit wasn’t there then we wouldn’t have businesses. My question lies in their accounting practices. Profit is the bottom line. Money going towards new projects and research is deducted before you get that profit. They are the expenses of running a business. This is something I think most Americans are able to comprehend, and if you ever had your own business then you really know what it means. You sit there looking for any deduction possible to keep your taxes down at the end of the year. So are these guys trying to say they don’t do that? Bullshit.
In this same response, Mr. Hofmeister also tried to explain the scale of these projects:
We’re looking at projects that take somewhere between 10 and 15 years to develop, for which we’re getting no payback. In other words, we have a project in Sakhalin. We’ve been out there for nearly a decade. It’s still going to be several more years before we get money coming back to us from the crude and the oil and the gas that we produce there. In the meantime, we’ve got other projects that we’re investing in. So the profitability, while it looks like big numbers, it’s all being spent on future energy reserves.
OK – oil refineries and rigs are enormous projects and I can understand them taking that long to develop but then this response a few minutes later really caught my attention:
MR. RUSSERT: Where would you try to find more oil in the United States?
MR. O’REILLY: There are two areas that remain relatively unexplored and that’s the outer continental shelf on, on the coast, which is a very sensitive issue for the American people, but I would argue that we need to look at this issue and we need to look at how we can safely and securely develop resources that are there, because today’s technology allows us to do it with much less of a foot print and in a much safer and environmentally sound way.
Now I admit I am a little prejudice on this, being an environmentalist, but I can’t help but wonder – why should we drill in these areas if it would be 10 to 15 years down the road before we benefit from it? We hear that great advances are being made in alternative energy and many predict in that time we can be free from oil dependency. So should we go tearing up our environment just to say “ahhh – we don’t need it”? If that did happen you can be certain the accountants at these companies would be taking that loss off of their taxes.
I ended up feeling extremely dizzy after watching that interview. I believe the total spin that occurred in NBC’s studios today amounted to the cumulative total of spin on Capital Hill in a month. We know that the oil companies are recording record profits and that one oil executive retired with a $400 million package. We also know that we are paying a lot more at the pump. Blame that on who ever you want; Washington, Iraq, Katrina but in the end our nation as a whole should absorb the impact and it is obvious the oil executives and their share holders do not want to help out on that.
You can read the entire transcript from MTP here.