More Shocking Profit Taking by ExxonMobil & Oil Giants

More Shocking Profit Taking by ExxonMobil & Oil Giants

Previously unheard of profits of $39.5 billion dollars were reported this week by giant ExxonMobilGas for the year. With $1 billion you could purchase 50,000 automobiles at $20,000 per vehicle. One billion dollars could provide 500,000 people with $2,000 per person of health and/or dental care. With one billion dollars you could build 20 schools or hospitals with a price tag of $50 million each. While consumers were paying $3 a gallon at the pump, this giant corporation had profit taking of nearly $40 billion dollars in one year. But, this oil giant has made record setting profits before. See previous post "Oil Profits Skyrocket" 10/27/06. They have also paid their CEO’s record setting salaries from their enormous profits as well. ("Greedy CEO" 12/19/06). Other oil giants also had record earnings. Chevron, the US’ second biggest oil company, followed the industry trend on Friday by reporting record earnings of $17 Billion dollars in 2006 as well. Royal Dutch Shell also increased its profit taking by 12% to $25.3 Billion. But it is Dallas centered ExxonMobil that leads the pack of greedy companies in profit taking at the expense of Americans at the gas pump.

In spite of increasing repeated record profits at the expense of the American consumer, the Republican Congress and the Bush Administration simply ignored calls for action. The oil giant announced record setting quarterly profits of almost $10 billion dollars  in 2005 as well. That’s more than a billion dollars a day, $45 million an hour, almost $340 for every living American. So what did the then Republican House Speaker Dennis Hastert say about this windfall profit? He said: "Oil and gas companies are enjoying record profits. That is fine. This is America."

The greedy giant’s ability to make obscene profits which gouge the American consumer at the gas pump began when its creation was allowed in 1999. That’s the year the Congress decided to ignore the reason anti trust laws exist and allow the merger of Exxon and Mobil creating the largest publicly traded oil and gas company in the world.

Anti trust laws are laws which prohibit anti competitive and unfair business practices. They are intended to put brakes on corporate and business practices which inhibit competition and therefore hurt the consumer in the pocket book. They were specifically passed to combat cartels or combination of competing businesses which could fix prices or avoid competition and therefore control the market place resulting in higher prices for consumers. One hundred years ago unrestrained capitalism had resulted in robber barons who merged competing businesses into giant cartels. These giant corporations became so powerful the public demanded action and laws were finally passed break them up. One of the largest that was broken up after passing the new law took place in 1911 when Standard Oil was ordered divided into separate companies. That occurred only after a long and protracted political and legal fight. What’s interesting to note is that both Exxon and Mobil are decedents of John D. Rockefeller’s Standard Oil.

When the merger of the two oil giants was proposed, a coalition of public interest groups as well as economists and consumer groups protested to the Federal Trade Commission and Congress. They pointed out that such a merger would create an oil giant with enormous political power and would eliminate competition which would then allow unreasonable profit taking at the expense of the consumer. They pointed out that the combined revenues of the two oil corporations in 1999 was $203 billion and to allow the merger would create the world’s biggest corporation. However, Congress had, by then, already allowed a year of big mergers such as MCI communications $34 billion dollar merger, Bank of America’s $60 billion dollar merger and insurance giant Traveler’s Group $760 billion dollar merger. But, when corporations become Goliaths, like Exxon and Mobil, they have an extraordinary amount of political influence. Shortly before the proposed merger, the two corporations spent $10.5 million lobbying Congress and the Administration and in spite of the protests, the merger was approved in November of 1999.

ExxonMobil long has enjoyed a close relationship with Congress, successfully lobbying to gain commercial access to federal lands as well as the rollback of several Environmental Protection Agency initiatives deemed unfriendly to the oil industry. Between 2000 and 2006, ExxonMobil has given $3.95 million to Republican candidates. Recipients include members of the Republican Congressional leadership including $34,000 to Dennis Hastert, Speaker of the House of Representatives. Over and above direct campaign contributions, ExxonMobil spent $7.14 on lobbying. Between 2000 and 2006, ExxonMobil has given $3.95 million to candidates. Can you guess who the top recipient was? The answer, of course, is George W. Bush and the rest went to Republican leaders in congress. Since 1999, when the merger was allowed, the corporation has spent $50 million on lobbying. In addition, the other giant oil corporations have also spent millions lobbying for favorable treatment of the oil industry. It was the money spent on heavy lobbying that resulted in convincing lawmakers to allow the merger in the first place and since then oil prices have soared along with the giant’s profits. Congress allowed the creation of a monster in 1999 and since it let the genie out of the bottle, it has shown no interest in taking steps to try to put it back inside while, at the same time, continuing to collect millions in political contributions. The result is this profit gouging corporation being allowed to spin out of control with outrageous profit taking at the expense of the American consumer. It is a classic illustration of exactly what the laws passed one hundred years ago were intended to prevent.

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