Congress should tell the automakers to go talk to the oil companies
Greed. Typically it comes back to bite you in the butt. Just ask Exxon how things are going now that people are using less fuel thanks to their skyrocketing prices.
Also, ask them how projections look, when Americans stop buying Hummers and Sufis- their best friends in boosting sales of their products.
Six months ago or so, big oil execs were being grilled by Congress about their record profits ($122 billion in one quarter). Now, we’ve got the US automakers begging for a bailout. There is a direct relationship here- but no one in Congress suggested that GM, Chrysler and Ford should go ask big oil for a handout.
$25 Billion shouldn’t be too hard for Exxon on its own:
Exxon Mobil made history on Friday by reporting the highest quarterly and annual profits ever for a U.S. company, boosted in large part by soaring crude prices.
Exxon, the world’s largest publicly traded oil company, said fourth-quarter net income rose 14% to $11.66 billion, or $2.13 per share. The company earned $10.25 billion, or $1.76 per share, in the year-ago period.
The profit topped Exxon’s previous quarterly record of $10.7 billion, set in the fourth quarter of 2005, which also was an all-time high for a U.S. corporation.
“Exxon can put out some amazing numbers and this is one of those cases,” said Jason Gammel, senior analyst at Macquarie Securities in New York.
Exxon also set an annual profit record by earning $40.61 billion last year – or nearly $1,300 per second in 2007. That exceeded its previous record of $39.5 billion in 2006.
Exxon posts quarterly, annual profit records – Feb. 1, 2008.
Economic systems, even in the most free wheeling economy- are still all based on a closed loop. Henry Ford understood this when he thought that paying his employees enough to be able to buy the cars they produced was a good idea. Exxon and the rest of big oil should be first in line to back the American auto industry, since they have been providing the cars that are tops in consumption.
The American auto industry is the proverbial goose that laid the golden egg for the oil companies.
Why can’t we have a Congress with anyone smart enough to suggest this?
I’m in favor of moving to more sustainable fuel sources, more public transit, etc., as much as the next guy, but I just don’t understand the hate for Western oil companies. Exxon, BP, and other Western companies control such a small portion of the reserves in the world that the fact that they are able to make such record profits is a triumph of creativity. Their wells will be the first to run dry; I’d rather rely on Exxon than Russia, Saudi Arabia, Iran, or Venezuela.
The profits that Exxon makes now allow them to invest in new exploration, which will keep foreign governments and their government-owned oil monopolies from shutting off our spigot whenever we don’t do what they want. You may say I’m being a corporate shill, and maybe I am, but I think I’m being realistic. We should move away from reliance on an oil economy anyway, but we shouldn’t punish Exxon et al to do it. It will just make the transition that much harder.
@Chris
Guaranteed, when there isn’t the demand, or the record profits, oil companies won’t be investing in exploration. Already, the huge drop in the price of oil has made some exploration no longer desirable. Big oil needs the Big 3. This should be a great investment for them.
Big oil aside, what cracks me up are the CEO’s of GM, Ford and Chrysler telling Congress that they will only work for a one dollar annual salary.
This is a simple-minded, PR ploy that I think very few people actually fall for anymore.
When they say they will give up their stock options and non-salary benefits (which need to be looked into quite seriously given their hands being stretched-out for taxpayer money) then I will start taking them seriously.
That’s the best suggestion I’ve heard all year David. Who’s next in line with their hand out, utility companies because customers can’t pay their monthly bills, homebuilders who went broke on speculation, convenience stores when they’re being robbed three times a day? I listened to a piece on NPR yesterday, said GM’s only way out now is bankruptcy and reorganization to shed the mountains of contracts bleeding them to death. Why in the world would anyone one want to hand them a few tens of billions more to prolong the agony?
This was the quote of the day right here:
“There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they’re going to be trimming down and streamlining their businesses,” Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.
“It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious.”
He added, “couldn’t you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it.”
Better yet, they should have DROVE to D.C.
And how many of these guys are downsizing their bonus this year to “Jelly of the Month Club” level?
All three of the CEOs did not agree to the $1 deal, in fact only one did. When the other 2 were asked – one said his already accepted reduction was enough and the other had no interest in any reduction of his $9 million salary. You can’t blame them, would any of us take a 50% pay cut to do the same job that paid so well for years and years before? They can go to some other company and make more than a $1 that’s for sure. A few of the guys in Congress really laid into them. (At least in the 30-60 seconds of sound bites I saw on the national news.)
No more bail outs. Let the free market work.
Re: “Jelly of the Month Club”
Too late for that. But it would have been nice if those guys would have used a little KY when they were screwing the American Auto Industry into the ground.
:-0
What about the added cost to replace the large scale mass transit systems that were destroyed as a result of the activities of the auto makers and big oil?
things like http://www.straightdope.com/columns/read/551/did-general-motors-destroy-the-la-mass-transit-system
The idea that big oil will use record profits for exploration–and that exploration will provide us with limitless energy–is probably a pipe dream.
Big oil already knows where lots of oil is located. It’s currently not profitable to extract that oil, either because it’s difficult to extract (off-shore, oil shale) or it’s low grade (did you know that, at the height of the gas-price spike, there were a dozen tankers with low-grade crude parked off the U.S. shore unable to find a buyer?).
Fossil fuels are not unlimited, and they create pollution no matter how hard we strive for clean technology.
Note that big oil intentionally decided to drive up prices by reducing supply when they mothballed refineries in recent years. In at least one case, a legitimate buyer wanted to take over a refinery, but despite a fair offer the oil company chose to retain the property and absorb the losses associated with keeping it idle.
Let’s ignore ExxonMobilBPShellCitgo and instead start looking to the next millenium’s energy sources. Is anyone planning to turn one of the abandoned fossil-fuel auto dealerships into a local dealership for Tesla and Aptera? Is no one here seeking to turn a former Delphi plant into manufacturing for the economical hydrogen fuel technology that Jerry Woodall is developing at Purdue? http://www.biofuelreview.com/content/view/1476/1/
We know what the curve is: I don’t see why anyone but an Exxon exec would want to stay behind it.