[Vision2020] Re: Exxon Mobil earned $11.23 billion first six months of 2004

[Tbertruss at aol.com]

Bill et. al.

Thanks for your detailed reply.

Your responses suggest as many questions as they answer.  And though you 
claim no loyalty to either political party, there is an implicit 
political/economic bias in your approach to analyzing these political/economic issues 
surrounding the oil industry.  

Bill wrote:

"I have found that there is little chance to change someone's mind about 
political persuasion"

"I've never felt that anyone else gains from listening to extended verbal 
boxing matches"

I disagree with your dismissal of the value of debate to change people's 
political views.  Of course many people are dogmatically entrenched in their 
views.  But not all.  There are some people who want to explore an issue fully with 
logic and facts, and a long back and forth discussion exploring in depth can 
facilitate this goal.  If facts and logic did not have the capacity to 
eventually change people's minds, we would still believe that the earth is the center 
of the universe.

Do you really think that Exxon/Mobil does not have tremendous influence on 
politicians setting government policy in the USA and in numerous other countries 
around the world?  OK, maybe my statement "Of course Exxon/Mobil probably 
owns as many politicians here in the US and around the world as they do oil 
wells," was exaggerated for effect.  But for you to respond as though to believe 
that Exxon/Mobil has tremendous influence on politicians around the world is a 
highly questionable view, well, maybe you need to focus on the political side 
of the oil industry, which cannot be separated from the economic forces you 
analyze.

The Exxon merger with Mobil has increased the concentration of corporate 
power in the oil industry, and there is evidence this has had deleterious effects 
on the interests of the average consumer in maintaining reasonable gas prices.

If you really are interested in a different sort of analysis of economics and 
the oil industry than the one you appear to be presenting, consider reading, 
if you have not yet, "Microeconomics" by Paul Krugman.

http://www.palgrave.com/products/Catalogue.aspx?is=0716762773

Paul Krugman, Professor of Economics at Princeton University, can argue these 
issues much better than I can.  For those interested, Krugman's book 
"Microeconomics" should offer food for thought regarding the concentration of 
corporate power in the oil industry, and associated economic and political issues, 
etc.  Consider though that this is a serious academic textbook.

The article below offers some regulatory ideas to manage gas prices, short of 
nationalizing the oil industry.  Who suggested this?  Not I!

Ted Moffett

Published on Tuesday, July 4, 2000 
    
Time to Cap Big Oil's Profit Gusher 
    
by Russell Mokhiber and Robert Weissman
    
    
The startling concentration of economic power that has resulted from the U.S. 
merger wave of the last several years is going to require new levels of 
government intervention in the marketplace. 

Either the federal and state governments will act to break up monopolistic 
and oligopolistic corporations, or government agencies will assume regulatory 
authority of a kind largely abandoned in the United States, or consumers will be 
gouged and innovation stifled. 

Case in point: the oil industry and skyrocketing gasoline prices -- now over 
$2.00 gallon in parts of the Midwest. 

Vigorous antitrust enforcement may be preferable to government regulation. 
But government regulation of industry is certainly preferable to industry 
regulation of consumers and the marketplace. 

A year and a half ago, when Exxon and Mobil merged in an effective effort to 
begin restoration of John Rockefeller's Standard Oil, the conventional wisdom 
was that the merger would not affect gas prices. 

"The change in the structure of the industry is such that the trend toward 
lower gasoline prices and more efficient distribution of gasoline is well 
underway and this is not going to stop it," one analyst said to National Public 
Radio in a typical remark of the day.

The Fort Lauderdale Sun-Sentinel went so far as to say that predictions that 
the Exxon-Mobil merger would increase prices were "delusional." 

Now, conventional wisdom is rapidly changing. 

With oil prices skyrocketing nationwide, prices spiking in the Midwest and 
industry profits reaching stratospheric heights, even the Clinton administration 
has called on the Federal Trade Commission to investigate whether the oil 
industry is illegally colluding to raise prices. 

The oil industry, as always, has a series of rationalizations for the sudden 
jump in gas prices. 

OPEC has cut production and world prices have risen, say industry 
representatives, even as global demand is increasing. That's true, but it does not 
account either for the unique price spike in the Midwest, nor for the surge in 
industry profits. 

New requirements to sell cleaner-burning gasoline have boosted prices, the 
industry complains, and led to special difficulties in the Midwest, where 
refiners use ethanol instead of alternative blending components. That's true, but 
the Environmental Protection Agency -- noting that the oil industry has had six 
years to prepare itself for the implementation of cleaner fuel standards that 
the industry helped negotiate -- says the cleaner-burning gas should only cost 
4 to 7 cents more per gallon. 

The industry also complains that a Unocal patent on a means to formulate 
cleaner-burning gas has impeded the use of the most efficient gasoline formulation 
techniques. That may be, but it doesn't begin to account for the huge price 
increases, the price spike in the Midwest, or the industry's outsized profits. 

It is hard to escape the conclusion that some significant part of the story 
involves industry profiteering -- with the oil giants using the input cost 
increases from OPEC and the reformulated gasoline standards as cover to pile on 
additional charges. 

Whether these extra charges were the product of collusive agreements or 
"conscious parallelism" can only be determined through an investigation that 
involves close questioning of key industry executives and careful review of industry 
documents. 

Either way, the profiteering is a product of industry concentration. Fewer 
industry leaders (and there certainly are fewer, following the recent mergers of 
Exxon and Mobil, BP and Amoco and BP Amoco and ARCO) make price-fixing much 
easier, whether done through overt and illegal agreement or follow-the-leader 
pricing without illegal collusion. 

There may be legitimate public policy rationales for raising gas prices -- 
notably, to spur conservation -- but if so, such price increases should be 
government mandated, with revenues used for appropriate public purposes. They 
should not be the result of industry rip-offs and profiteering. 

Absent government initiative to bust up the oil trust, these kinds of price 
increases are bound to continue haunting the United States -- unless the 
government chooses to regulate Big Oil. 

The first and most pressing need is for a windfall profits tax, to put an end 
to the industry's gain from consumer's pain due to OPEC and other input cost 
increases. 

A second and relatively modest step would involve the issuance of a 
compulsory license to require Unocal to let competitors use its clean-burning gas 
patent. A patent monopoly cannot be permitted to block implementation of effective 
technologies to clean the environment. Representatives Dennis Kucinich, 
D-Ohio, John Baldacci, D-Maine, Frank Pallone, D-New Jersey, and Tom Barrett, 
D-Wisconsin, have introduced legislation to make this possible. 

Finally, it is time to think seriously about price controls. Richard Nixon 
did. The oil giants clearly do not have complete control over gas prices, but 
they do have the ability to set prices above competitive rates. Why should 
industry regulate the market instead of democratic government authorities? 

There are many needed measures on the demand side -- to increase energy 
efficiency and facilitate a rapid transition to solar and other clean energy 
alternatives -- but these are not a short-term solutions. Only direct government 
regulation will stop the oil oligopoly from persisting in its price gouging. 

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime 
Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational 
Monitor. Mokhiber and Weissman are co-authors of Corporate Predators: The Hunt 
for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage 
Press, 1999, 

http://www.corporatepredators.org (c) Russell Mokhiber and Robert Weissman 
###

Link to info on this book:

http://www.corporatepredators.org
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