I also like to think I'm just smart enough to identify who the really smart people are and try to pay attention to them. Ben Stein happens to be one of those people, at least to me. To me, he epitomizes intelligence tempered with honesty and common sense. He also has a unique oratory and written style that speaks to me. I found his latest NY Times article confirming a few things that have been rattling around in my brain for the past year, as headlines and Democratic politicians in our decidedly capitalist nation have decried the oil companies' recent financial successes as being excessive, evil and something to be stopped before they cause the collapse of the civilized world and the loss of the little bowls of free pennies found next to many cash registers.
Ben (and Big Oil and a free-market society, it seems) are not without their detractors, however. Seeking Alpha's Felix Salmon has a hard-on for Ben and not in the normal "I wish you were my pet sheep" kind of way. He doesn't hesitate to bring the hammer down on my hero and intellectual savior and the unforgivable greed of Big Oil, and I'm sorry, but this just plain old pisses me off. Felix argues for profit caps on a non-monopoly, which goes against everything, economically, we stand for in this country. He also ignores the fact that one must take risks in order to gain profit and Big Oil is the classic, textbook example of big risks translating to big profits for those willing to invest in the the risk. Oddly enough, he separates profits from cost and re-investment and nails XOM's $40 billion as excessive and evil. W.T.F? He really needs to consider a couple of things, in my humble opinion.
First, like any other industry, petroleum is cyclic in nature, but like minerals extraction, is violently cyclic. It is exactly these large profit margins in these heady times that allow the XOM's and Chevrons to survive the deep downturns in their industry, consistently investing in R&D, advancing the world's cutting-edge technologies that make today's exploration and extraction efficient, economic and even possible as the world's remaining reserves are found in deeper water, and more remote and hostile environments found in countries that have less and less love for the good old US of A (and the big, trans-national companies that still look like the USA to them) and are making it more an more costly to do business there.
Second, a publicly-owned entity needs a continual investment by the public and that only comes with trust. Trust built on continued successes (which require high profits allowing a large re-investment in R&D to capture increasingly more dangerous oil) and consistently high profits which guarantee maxim return on one's investment. XOM's not going to be anyone's first investment choice if Felix had his way and capped their profits. I think it's a matter of one's envy creating an illusion of another's greed.
XOM and it's brethren are not Saudi Arabia. They don't possess a sea of oil under their company headquarters, having only to open the valves and rake in $40 billion in profits. They have to spur the development of, or develop themselves, the cutting-edge technologies that many other business' come to rely on as matter of habit. The gains in computer technologies? Driven by the oil industry and everyone benefits, including Felix as he bangs out his article. Engineering, communications, transportation, materials science, the list goes on. It costs a helluva lot of money to drive a technology forward and we ALL benefit from those investments, not just the oil companies.
Big Oil doesn't exist in a vacuum. As Ben points out, XOM's profits feed pensions, funds, retirement accounts, etc. They are also directly tied to thousands of other business and industries. Manufacture of the pumps, pipes, drill rigs, computers, ships, tanker trucks, cranes, refineries, and countless thousands of other items absolutely necessary to coax a single barrel of oil from the depths, ship it to a refinery, refine it and then ship it to where it is finally used in whatever form, be it gasoline in your car's fuel tank, or the plastic of a syringe that saves the life of your child (yes, a not at all subtle reminder of the tired, old argument that your being hypocritical, slamming an industry when it's responsible for so many of the things you use to slam it with). All these things are tied to a healthy and profitable oil industry. The better it does, the better the countless thousands of business and industries that rely on the oil industry as their largest, or only customer. Big Oil is business, spread across the continuum and cannot be singled out, nor capped without cutting everything.
Politicians and journalists who find it necessary to use BIG OIL profits as a convenient and easily digestible scapegoat for the disillusioned have-nots, put me in mind of the bitter man with a funny little mustache who used a people in the same manner, many years ago and while it's nowhere near the same horrific thing, it's still wrong. You can't make someone, or something a scapegoat, blaming them for your own failings and shortcomings without expecting to get called out and taken down, eventually.
Simply Google the price of oil in any other country that's a net importer of oil. We're getting damn cheap oil from the XOM's of the world and should think twice before calling to shoot them in the back. Oh yeah, and our national debt is rapidly approaching a value incomprehensible to the majority of intelligent life in the universe and XOM paid $30 BILLION in taxes in 2007. We all benefit from that, don't we? Taxes paid are not the only figure missing from any of the arguments against big oil profits. I'm not going to look it up, but what percent of net sales do these profits represent? I think you'll find ALL XOM's financial numbers are huge, both positive and negative. Big is BIG any way you slice it, no?
On a slightly odd side-note, this month marks the anniversary of my beloved PW going through with her promise to marry me, despite all my obvious shortcomings. I sure wish I had even a small chunk of that $40 billion to buy her all the things she deserves for putting up with my shit and being such a wonderful wife, friend and mother. (especially since I'm half-way around the world and can't even take her out for a non-McDonald's dinner) I love you honey.
Anyway, as usual I'm angry and emotional instead of intelligent and rational, but people, that's how I roll and if you don't like it I also own more than one gun. That said, feel free to disagree and criticize.