May 2nd, 2008
06:20 AM GMT
NEW YORK – Is it possible for a company to make too much money? It is if you are big oil. Thursday, Exxon Mobil said it made a staggering $11 billion in profits in the first three months of this year. It is the second highest U.S. corporate profit on record. (Exxon's 4th quarter holds the top spot!) Although smaller in overall numbers, B.P. and Shell did even better during the first quarter. Consumer advocate groups are outraged. Oilwatchdog.com said the roof-busting profits are coming at the cost of squeezed consumers and the suffering economy. They want U.S. lawmakers to do something.The three Presidential hopefuls all say they have a plan. Democratic contenders Hillary Clinton and Barak Obama have both proposed a "windfall profit" tax on oil companies that would be used, in part, to fund renewable energy research. Clinton also wants to use that money to pay for a suspension of the federal gas tax this summer. A gas holiday, if you will, for consumers. The presumptive Republican candidate, John McCain also supports a gas holiday, though he is not in favor of a windfall tax.
Oh please. Energy is one of the biggest challenges facing our country and this is what they come up with? A gas holiday? Most energy experts say cutting the federal gas tax for three months would do little to actually help consumers and may actually result in worse roads. The federal gas tax goes toward highway construction and repairs. A windfall tax on oil companies doesn't sound much better. The U.S. Congress can't agree on anything, what makes anyone think they will be able to effectively use any new tax money to find new renewable sources of energy?
I think a more realistic solution comes from the ranks of oil royalty itself. Descendants of the oil baron John D. Rockefeller went public this week saying they will back a shareholder rebellion to try and force Exxon's management to put more resources toward alternative energy. A group of resolutions, to be introduced at this month's shareholder meeting, call on Exxon to adopt a new energy policy, fund research on climate change and set public goals for reducing carbon emissions. The great-granddaughter of John D. was quoted as saying, "the truth is that Exxon Mobil is profiting in the short-term from investments and decisions made years ago ....and ignoring the rapidly shifting energy landscape...." Another said, "They are fighting the last war and not seeing they are facing a new war."
It is too early to tell whether the resolutions will pass, but if they do it could signal an important shift in the energy sector. At the very least, Exxon shareholders are thinking longer term. I wish I could say the same about U.S. politicians. Trying to buy votes with a summer gas holiday doesn't help solve our energy problem. Neither does blaming the oil companies. We need a comprehensive energy policy that encourages private sector solutions and helps American consumers come to terms with a harsh reality: we need to stop using so much energy. Forget about knocking 18 cents off a gallon of gas this summer, how about a bigger tax break on a hybrid?
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