(Response to Mike Masterson column, Arkansas Democrat Gazette, May 10, 2011)
Mike Masterson wants us to believe that oil industry profits are not high enough: they only make “a nickel on each gallon of gas”, he claims. If that number sounds suspiciously low, given near record prices of roughly $100 a barrel and $4 a gallon at the pump, it is because it is a fabrication. Let’s look at the actual figures and do the math.
According to the Energy Information Administration, US petroleum consumption in the first quarter of 2011 was 19.0 million barrels per day, a total of 1.7 billion barrels or 72 billion gallons. A nickel for each gallon would amount to $3.6 billion in oil industry profits. That’s according to Mike Masterson. Here is what they really made in profits: ten times as much! According to recent profit announcements, ExxonMobil, BP, Shell, Chevron, and ConocoPhillips alone made $34 billion in profits in the first three months of 2011 – a huge number, up 42 percent from a year ago. Companies like Exxon make an obscene windfall profit on every barrel of oil they extract because the world market price is far above the actual cost. According to Phil Weiss of Argus Research, in the first quarter, Chevron reaped $25 in profit for every barrel of oil it sold, compared with $20 for ExxonMobil. A barrel of oil is 42 gallons so those numbers represent 48 to 60 cents per gallon. It is difficult to exactly quantify the per gallon profit because Exxon and its sister companies know how to obfuscate these numbers for example by selling their own oil to their own refinery and then to their own distributor so that profits end up being booked on the cost side of the ledger. But the record profit numbers published and celebrated by Big Oil year after year belie the paltry “nickel per gallon” fairy tale numbers.
Why do we hear media commentators like Masterson speak up in defense of unearned Big Oil profits, spreading lies on behalf of the corporate establishment? It is part of a propaganda war. Corporate elites, along with the politicians they have bought wholesale and the propaganda organizations and pundits they control, are working tirelessly on wealth redistribution – away from hardworking Americans and towards the establishment. President Obama suggested revoking $21 billion in tax payer subsidies to Big Oil – and wouldn’t you know it, the Republicans are dead opposed to such an act of fiscal sanity. Republicans, including our own Boozman and Womack, would literally take food and medicine out of the mouths of poor children (they voted to cut the Women, Infants and Children Health and Nutrition program, which serves 9.6 million low-income women, new mothers, and infants each month) in order to guarantee a healthy kick-back to their Big Oil and other corporate paymasters.
Ordinary Americans have been forced to make sacrifices in order to bail out and restore the profitability of the financial industry. We have suffered the worst economic crisis in 80 years but corporate profits have already reached, or even exceeded, their pre-crisis levels while unemployment remains at a record high, real wages are declining, the Middle Class is losing ground and tens of millions continue struggling to even survive. At the same time, the superrich are doing just fine, having secured another tax cut windfall thanks to Republican deficit racketeers.
What we need to understand is how corporate attitudes towards America have changed. For most of the post-war period, corporate interests tended to agree that some measure of shared prosperity was good for everybody – good for the country and good for their bottom line. They created jobs and paid taxes to support public investments such as education and infrastructure, supported a strong and vibrant middle class, kept the lid on excessive inequality (CEO pay in 1965 was about 26 times the average worker’s salary, not 500 times as is common today), and tolerated the New Deal’s basic social safety net. That is no longer the case. There is now a growing fraction among the corporate establishment who don’t care anymore if the country is transformed into a failing banana republic of Third World living standards, torn apart by unmitigated inequality. They no longer have much of a stake in the common good because their profits come from plundering the economy, looting our natural resources, and pillaging the treasury. They have learned that greed is good and recklessness gets rewarded. And the Mike Mastersons of the media world are their willing accomplices.
(Note: Mike Masterson is opinion editor of the Arkansas Democrat Gazette’s Northwest edition. His editorial is accessible to subscribers only. The letter above was sent to the newspaper and was not considered for publication. My request for the newspaper to publish a factual correction was ignored.)