OIL COMPANIES WILL BE OIL COMPANIES

Let’s face it – they are called oil companies for a reason. They certainly are not called alternative energy companies. Just a few months ago, we were looking at the bitter end of the gas nozzle and forking over a little more than $4.00 a gallon for gas. Then a few weeks before the election, the prices started dipping downward.

Ah, sighed many die-hard, “drill baby drill” enthusiasts, the sinking gas prices were surely due to the potential for drilling in coastal, off-shore areas that had previously been protected from the oil companies’ screeching demands. The fact that the results of such drilling would not be seen for 10 years was simply a nuisance factor that drill supporters chose to ignore.

Photo credit: Solarnavigator

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The oil companies have made record profits over the past year and are in no danger of going broke from falling gas prices. But, consider this. The higher gas prices actually affected the driving habits of American motorists. The higher prices also made SUVs, Hummers, and the other outrageous gas guzzlers extremely unattractive to drive. Combine the two modifications – driving habits and consumer vehicle preferences – and you have a decrease in the demand for gas triggered by high per gallon prices.

Ouch. The oil companies were now looking at a decrease in demand for their product. Perhaps they had helped drive the prices too high. The solution of course was to bring down the price of gas which would, in turn, trigger motorists to once again drive like there was no tomorrow. At least that was what the oil companies certainly hoped.

Bringing down the gas prices also has the effect of making it less attractive to invest in alternative energy sources – especially if consumers no longer see the alternatives as economically feasible. Thus, producing ethanol may be cost prohibitive with the result that ethanol will be much more expensive than regular gasoline once gas prices drop.

Oil companies mouth platitudes about their desires to invest in alternative energy solutions, yet take their billions of dollars in profits and spend them on other more lucrative endeavors. The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends in 2007, up from 30 percent in 2000.

In the first three months of this year, Exxon Mobil Corporation, the world’s biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.

Oil companies have not changed their names to alternative energy companies, and they never will. Look for gas prices to stay low in an effort to lull Americans back into their old driving habits and their penchant for gaz guzzlers. After all, oil companies will be oil companies. Think about it – and it should make sense.

Photo credit: Canadiangeographic

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About Charlotte A. Weybright

I own a home in the historical West Central Neighborhood of Fort Wayne, Indiana. I have four grown sons and nine grandchildren - four grandsons and five granddaughters. I love to work on my home, and I enjoy crafts of all types. But, most of all, I enjoy being involved in political and community issues.
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2 Responses to OIL COMPANIES WILL BE OIL COMPANIES

  1. Mike says:

    Gouging is the name of the game (from the oil companies down to the gas distributors.

    This was an article from the Anderson Herald along with its comments:

    Gas cheaper elsewhere

    Everyone needs to call the mayor’s office, call your congressman, call the attorney general, and stop buying gas in Anderson. I paid $2.96 in Fishers, while gas was still at $3.13 in Anderson. The farther from Anderson, the cheaper the gas!

    COMMENT 1:
    A while back, there was an article where Ricker was talking about gasoline being cheaper that some other item that we buy. The only difference was that we pay for gas weekly, while the item that he was talking about would have lasted several years.

    A couple of years back, a person bought gas and commended the owner for having cheaper gas prices. That’s when he heard the person in the office talking about raising the price. They try to pull the wool over our eyes and suck the blood out of us.

    Price gouging and fooling the public is the name of the game.
    Posting date 10/24/2008 11:19 AM
    Posted by Mike

    COMMENT 2:
    You are correct! Today, Kelly Jack from the Track radio station was talking about this today, and had prices listed around 2.75 a gallon while gas prices in Indy and everywhere else were around 2.29 and lower! Embarassing and makes Anderson look even worse.
    Posting date 10/24/2008 4:33 PM
    Posted by Chris

    COMMENT 3:
    Call the mayor?? Ha! Ha! Ha! Ha! Ha! To protect your wallet?? Ha! Ha! Ha! Ha! Ha! He’s out pan-handling for more taxes with other city governments even as you write!! The Mayor?! Good grief!!
    Posting date 10/27/2008 8:37 PM
    Posted by Del

  2. What a sensational post! I did a sort of blogging for dummies over on one of the CPA Marketing forums and I guessed it was too simple for them, but the number of emails I got asking questions just like what you addressed was incredible. As young people today we have grown up with computers, but it’s easy to forget that even people just a a couple of years older have not! Really good post! 🙂

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