Profit-Drenched Oil Companies and Gas Prices

This is a three-part commentary on the energy crisis and gas prices.

Part 1

Once again the Republicans in Congress have bowed obsequiously to the powerful oil companies and defeated the “Consumer-First Energy Act of 2008” (S. 3044). On June 10, 2008, the Democrats in the Senate fell 9 votes short of getting the 60 votes needed to overcome a Republican filibuster and move the bill forward.

The bill would have provided energy price relief for all Americans and would have provided the President, the Federal Trade Commission, and state attorneys general with the tools necessary to investigate and deal with potential price gouging during energy emergencies. It would have required the Secretary of Energy to temporarily suspend acquisition of petroleum for the Strategic Petroleum Reserve. It would have allowed the Attorney General to bring anti-trust enforcement actions against any country or company that is colluding in setting the price of oil, natural gas, or any petroleum product. It would also have curtailed excessive speculation in oil futures by commodity traders.

The primary cause of the Republicans’ objection was a provision in the bill that would impose a 25 percent tax on “windfall profits” made by oil companies. Republicans declared that this was just another tax measure that would do nothing to lower gas prices. In fact, it was not really a tax at all. It was an incentive. Oil companies would not have had to pay the tax if they invested the excessive part of their profits in alternative energy projects, refinery expansion, and promotion of energy efficiency and conservation.

According to the Congressional Research Service, ExxonMobil, the largest oil company in the world, shattered records in 2007 by making the largest net profit in history, over $40.61 billion. For the first quarter of 2008, Exxon’s profit was even higher--$10.9 billion compared with $9.3 billion in 2007. All of the other major oil companies followed suit with staggering, record-setting profits. The total 2007 profits of the top nine oil companies came to $127.994 billion.

Needless to say, the compensation packages for executives of these profit-bloated companies were correspondingly immense. According to the executive compensation research firm, Equilar, executive compensation for the CEOs of the 12 largest U.S. oil companies rose by more than four times the rate of all other executives in the S&P 500-stock index--from a median of $14.6 million a year in 2006 to $15.4 million in 2007. Rex Tillerson, the CEO of ExxonMobile, earned $21.66 million in 2007, and Ray Irani, CEO of Occidental Petroleum, received $33.62 million.

Back in 2004, at a time when the oil companies were already deluged with windfall profits, the Republicans in control of Congress passed over $10 billion in tax breaks for the oil industry. Now, in 2008, with gigantic profits gushing into oil company coffers, the Democrats sought to eliminate those tax breaks. They also sought to correct a loophole by which oil companies were able to avoid paying royalties of about $6 billion on oil leases from the federal government. President Bush, Dick Chaney, and the Republicans in Congress strongly opposed these changes.

It was the intention of the Democrats to use the money from these steps to create an alternative-energy fund which would finance new solar, wind, and biofuel projects. The bill would also have used the revenue to create an Energy Independence and Security Trust Fund, which would reduce U.S. dependence on foreign and "unsustainable" energy sources and reduce the risks of global warming.

Now that the Republicans have succeeded in blocking the Democrats’ energy bill, what do they want to do? The answer is that they want to open-up the Arctic National Wildlife Refuge (ANWR) in Alaska for oil drilling. They also want to open-up vast new areas for offshore oil and gas exploration and drilling.

The problem with the Republicans’ demands is that they are based on a combination of misinformation, ignorance, and baloney. As my next commentary will show, drilling for oil and gas in ANWR, and in additional offshore areas, would do practically nothing to lower the price of gas. Moreover, it would do nothing to help solve our energy crisis and would do everything to increase pollution and global warming in areas that are environmentally sensitive and economically important to the states.

Part 2

On June 18, 2008, President Bush urged Congress to end a federal ban on offshore oil drilling and also to open a portion of the Arctic National Wildlife Refuge for oil exploration. This would mean opening the east and west coasts and large parts of the Gulf of Mexico to oil rigs and drilling platforms. President Bush asserted that this would lower gasoline prices and “strengthen our national security.”

Bush’s call for more oil drilling to solve our energy needs reminds me of the testimony given by Athan Manuel of the Sierra Club on June 11, 2008, before the Select Committee on Energy Independence and Global Warming of the U.S. House of Representatives. Manuel is the Sierra Club’s Director of the Lands Protection Program. In commenting on the idea of solving our energy problems by more drilling, Manuel quoted the immortal words of Homer—Homer Simpson that is—“Stupidity got us into the mess, and stupidity will get us out.”

Manuel went on to point out that: “Unfortunately, some members of Congress and the Administration think like Homer Simpson, that the solution to our energy problems is the actual problem itself – a continued dependence on fossil fuels and more and more oil and gas drilling. If we are truly addicted to oil, as President Bush admitted in a recent State of the Union address, the answer is not to simply seek a bigger fix by drilling off of our beaches and in our last special places like the Arctic National Wildlife Refuge.”

It isn’t Bush’s stupidity that got us into this mess. It’s just that in eight years he has done nothing to prevent it. With the power of the presidency and a compliant Republican Congress, Bush could have created far-seeing policies that confronted the dangers of short energy supply and high gasoline prices. Instead, in line with his background as an oil man, he did absolutely nothing. Now he and the congressional Republicans, thinking that it might be a good campaign issue, argue that the solution to our energy problems is more drilling. The argument is thoroughly dishonest and fraudulent. They know better.

Manuel testified that if Congress authorized leasing for the coastal plain of the Arctic Refuge, production would not start for another ten years. The U.S. Energy Information Administration (EIA) reports that during the decade between 2021 and 2030, Arctic Refuge production could reduce prices at the gas pump by approximately 3.2 cents per gallon. Golly!

The same is true for America’s Outer Continental Shelf. Drilling there would not begin for 10 years and would not necessarily lower the price of gas. The price of gas is set on the world market, largely by OPEC. Look at gas prices in those countries that allow and promote offshore drilling: United Kingdom: $8.37 per gallon; Norway $7.33; Germany, $6.72; Canada, $4.34; and Japan, $4.16.2.

The most fraudulent aspect of the Republicans’ argument is the claim that we desperately need offshore and Artic Refuge oil to counteract our oil shortage and to solve our energy crisis. The fact is that the oil companies have plenty of offshore oil and, for some reason, they are not drilling for it.

Oil companies hold thousands of unused oil and gas leases. According to information provided to Congress by the Department of the Interior, there are more than 7,500 active leases in the outer continental shelf and only 1,655 in production. Only 10.5 million of the 44 million leased acres are currently producing oil or gas. Combined, oil and gas companies hold leases to nearly 68 million acres of federal land and waters where they are not producing oil and gas. As one congressman put it, that is an area the size of two states.

Of the 47.5 million acres of on-shore federal lands that are currently being leased by oil and gas companies, only about 13 million acres are actually in production or producing oil and gas. Experts say that these untapped onshore and offshore lands could yield an estimated 4.8 million barrels of oil and 44.7 billion cubic feet of gas per day.

Why are the Republicans claiming that we need to open-up the Artic National Wildlife Refuge and the areas off our beautiful national beaches for ugly and polluting oil drilling when the oil companies are not making use of the places they now have? Could this be simply a campaign tactic to mislead the public and divert its attention away from the President’s failure to act?

Part 3

The biggest problem with the Republicans’ argument—namely, that we should open-up the Artic National Wildlife Refuge (ANWR), and all remaining offshore areas, to oil and gas exploration and drilling--is that it sounds so good! Who cares if we drill oil and gas up in remote, barren, frozen Alaska? What’s so bad about opening up more offshore areas to oil and gas exploration and drilling? Don’t they have sufficiently advanced technology to prevent oil spills and pollution?

Aside from the fact that such exploration and drilling would do virtually nothing to lower the price of gas, and would do absolutely nothing to relieve our energy crisis, and the fact that the oil companies already have leases to millions of unused onshore and offshore acres which they have not yet begun drilling, the truth is that such additional drilling would create an environmental disaster.

The Artic National Wildlife Refuge is a very special place. It is a nineteen-million-acre area of wilderness in northeastern Alaska in the Alaska North Slope region. It is inhabited by over 45 species of land and marine mammals including the polar, grizzly, and black bears, as well as wolf, wolverine, Dall sheep, moose, musk ox, tens of thousands of migrating snow geese, and, of course, approximately 123,000 caribou. Thirty-six species of fish occur in Arctic Refuge waters, and 180 species of birds have been observed on the refuge. ANWR is just that, a “refuge” for wildlife.

The Refuge is magnificently beautiful, with mountains, rolling hills, small lakes, and north-flowing, braided rivers. There are no roads, but the area has thousands of hikers, campers, hunters, trappers, fishermen, and other visitors every year. The only permanent residents, as far as I know, are Inupiat and Gwich’in people.

Oil production in the Arctic Refuge would, according to the U.S. Geological Survey (USGS), come from many relatively small oil fields, not one large field like Prudhoe Bay. Athan Manuel of the Sierra Club testified before Congress that the result would be a sprawling industrial complex of drilling sites spread throughout one-and-a-half million acres of critical wildlife habitat. There would be hundreds of miles of pipelines, roads, oil derricks, airstrips, power plants, power lines, landfills, pumping stations, housing for workers, and oil processing facilities. There would be air pollution (particularly nitrogen oxides and methane, a greenhouse gas), oil spills, drilling wastes, and sewer sludge.

If you think that oil company technology is too advanced to permit oil spills and pollution, consider that just two years ago, BP, the largest operator on Alaska’s North Slope, caused the largest oil spill in North Slope history – over 200,000 gallons of crude oil, and a temporary but massive shutdown of the nation’s largest oil field due to pipeline corrosion. According to the Alaska Department of Environmental Conservation, there are “about 500 oil spills . . . in the Prudhoe Bay oil fields and along the 800-mile pipeline each year.”

Opening up the offshore areas of the East, southern, and West coasts of America to further oil drilling would also cause an environmental catastrophe. If you have ever gone swimming at Jones Beach in New York, or the beaches of New Jersey, Maryland, Georgia, the Carolinas, Florida , or California, you might have a hard time imagining ugly, dirty, pumping oil rigs off in the water. Athan Manuel points out that America’s coasts are a complex mosaic of sea grasses, wetlands, estuaries, beaches, and dunes. Offshore drilling is not compatible with this fragile ecosystem.

Statistics compiled by the Department of the Interior show that there were 3 million gallons of oil spilled from offshore oil and gas operations in 73 incidents between 1980 and 1999. Oil is extremely toxic to a wide variety of marine species. A recent National Academy of Sciences study found that current cleanup methods are incapable of removing more than a small fraction of the oil spilled in marine waters.

In 2005, Hurricanes Katrina and Rita caused massive spills of oil and other pollutants. The storms caused 124 oil spills into the waters of the Gulf of Mexico. During Hurricane Katrina alone, 233,000 gallons of oil were spilled. There were 508,000 gallons spilled during Hurricane Rita.

We have to ask ourselves whether this colossal environmental damage is worth the infinitesimal reduction in the price of gas that might result from drilling in ANWR and in the offshore areas currently under a ban.

Obama and Hope

"The way to continue our fight now, to accomplish the goals for which we stand, is to take our energy, our passion, and our strength, and do all we can to help elect Barack Obama the next president of the United States." SENATOR HILLARY CLINTON, bowing out of the presidential race.


There are many people who might have voted for Senator Clinton for president but who are reluctant to vote for Barack OBama because of his race. White Blue-collar workers, and even White liberals, are turned-off by the failure of inner-city blacks to make progress beyond poverty, crime, and a ghetto mentality. They hear the diatribes of Reverend Jeremiah Wright and it confirms for them that there is a vast chasm between the beliefs of Whites and the resentments of Blacks. Many white people are angry at black people.

What these white voters fail to think about is that there are millions of poor Whites stagnating in underprivileged, crime-ridden sections of large cities, starving in destitute rural communities, and unemployed in poverty-ravaged hills all over America. No president in our history has ever had deeper empathy for these fellow citizens than Barack Obama.

Now is the time to turn that anger against African Americans into exaltation. Now is the time to rid ourselves of the bitterness of sour race relations and to glory in the new thing that has been accomplished by a great nation. Now is the time to look beyond the petty hatreds of the past and seize this moment to project America into a new and better future.

Millions of African Americans all over America have risen out of the dark heritage of slavery and segregation to become leaders in business, science, medicine, law, and politics. Look at Clarence Otis, CEO of Darden Restaurants, parent company of Red Lobster, Olive Garden, and 1,325 other restaurants. Look at Kenneth Chennault, CEO of American Express. Think of Stanley O’Neal, who until recently was CEO of Merrill Lynch, and Richard Parsons, who was CEO of Time Warner. There are many other Black CEOs of major American companies.

Television watchers have only to tune into PBS to see Dr. Neil DeGrasse Tyson, an astrophysicist who is Director of the Hayden Planetarium in New York and frequent host of NOVA. Then there is Ted Wells, one of the country’s top attorneys who recently represented Lewis “Scooter” Libby. Wells is a partner in the firm of Paul, Weiss, Rifkind, Wharton, & Garrison, one of the nation’s biggest and most prestigious law firms (disclosure-I once worked there). Look at Vernon E. Jordan, one of the top attorneys in America, a power in Washington D.C. politics, and friend of Bill Clinton. Look at Oprah Winfrey!

America can take great pride in the achievements of African Americans like Colin Powell, Condoleezza Rice, Governor Deval Patrick of Massachusetts, and thousands of congressman, state legislators, mayors, councilmen, and other politicians. I could go on for many pages listing the accomplishments of outstanding African Americans who overcame prejudice, and often poverty, to help lead this nation.

Now, above and beyond all of these great Americans, has come a man who could lead all of us into a better world. Barack Obama is a graduate of Columbia University and Harvard Law School, where he was President of the Harvard Law Review. As a lawyer, I can appreciate what an extraordinary accomplishment that is. Obama worked as a community organizer, university professor, political activist, and lawyer before serving in the Illinois Senate from 1997 to 2004. Along with all of the great African American leaders, he has given the lie to the quietly whispered calumny of Black inferiority.

I feel that this nation has been wandering in the darkness for a long time. We have a chance to overcome the evils of our past and march into a better future. Barack Obama could be the president who brings back the prestige, respect, and appreciation of America around the world. He could be the president who unifies the people of this nation and solves the problems we now face. He could be the president who improves our economy, ends the Iraqi war, brings health insurance to all, begins the fight against global warming, and puts the nightmare of racism behind us.

When the time comes, don’t vote with bitterness and anger. Vote with hope and trust and optimism. If you can, like me, vote with a crescendo of joy and gratitude that you were born in this wonderful country.

Global Warming and the Republican Filibuster

The oil companies and other big businesses that have virtual control of our government must be dismayed now that the government’s own agencies have reported about the existence, causes, and danger of global warming. On May 30, 2008, after deliberately delaying publication for three years, and only after he was ordered to do so by the court, President Bush grudgingly released a report by the Committee on the Environment and Natural Resources of the National Science and Technology Council (NSTC).

The NSTC report states that there is growing danger from global warming and that human-driven climate change will damage ecosystems and pose challenges to key sectors of the U.S. economy, including agriculture and energy. The report adds that because of greenhouse gas emissions, the “evidence suggests a substantial human contribution to recent hurricane activity.”

On May 27, 2008, the U.S. Department of Agriculture (USDA) released a report demonstrating that global warming has already had dire consequences for farming, forestry, and water. The report points to future serious consequences of global warming due to Bush’s inactivity over the past eight years, saying: “Much of this change will be caused by greenhouse gas emissions that have already happened.”

By law, the Bush Administration was required to publish a national assessment on climate change every four years. Until this year, the Administration has refused to do so. The reason is obvious. The reports contradict the Administration’s position that there was no such thing as global warming, or that even if there was global warming, it was not caused by the release of greenhouse gasses.

This is not the only instance in which the Bush Administration has tried to block release of scientific evidence of global warming. Recently, the Inspector General of NASA criticized the activities of Bush Administration appointees for distorting and suppressing NASA’s climate science findings.

The evidence that there is global warming and that it is being caused by human emissions of greenhouse gasses is no longer in any doubt. Exxon Mobile has financed studies relied upon by the Republicans in Congress to argue against climate change science, but it is no longer acceptable or honorable for politicians to rely on these dubious reports by paid flunkies of the oil industry.

In 2007, the Intergovernmental Panel on Climate Change (IPCC), a UN sponsored organization made up of leading scientists from all over the world, issued a report stating that: “Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea levels.” The report found that the increase in global warming was most likely caused by human emission of greenhouse gasses.

In May, 2008, 1,700 of America’s most prominent scientists and economists, including six Nobel Prize winners, issued a joint statement calling on policymakers to require immediate reductions of at least 80 percent in the heat-trapping emissions that cause global warming. The statement warns of the growing risks of continued global warming, including: rising sea levels, heat waves, droughts, wildfires, snowmelt, floods, disease, and extinctions of plant and animal species.

The opposition to this enormous array of scientific evidence is not other scientific evidence, but a campaign of lying and misinformation by oil companies and other fossil fuel producers. Their motivation is obvious. The cost of reducing greenhouse gasses would cut into their profits.

This past week the Senate debated S. 3036, a bill that would require the reduction of carbon emissions by 70 percent by mid-century. On June 6, 2008, Senate Republicans blocked the bill. Democratic leaders fell a dozen votes short of getting the 60 needed to invoke cloture and end a Republican filibuster against the bill.

President Bush and the Republican leaders opposed the bill ostensibly on the grounds that it would harm the economy. What are they thinking? Can’t they read? Don’t they realize, as the NSTC and the USDA reports demonstrate, that continued global warming will crush our economy? They are subordinating the future of our economy, our environment, and our planet to transient political considerations. We are on a train thundering toward disaster. The warning sirens are ringing. It’s time to wake up!