In the United States, oil prices will go up this summer – surprise! For much of the American media, this is a headline. For most US consumers, it is something that happens fairly regularly – albeit more of a rise than in the past couple of years.
And what do we hear from much of the media? That the price of oil has gone up because oil companies seek “excessive profits,” and companies like ExxonMobile gave their CEO a $400 million retirement package – certainly the height of “excessive profits.”
Consider the following: In 2003 and 2004, ExxonMobile CEO Lee Raymond’s compensation was roughly $66 million, but he generated $46 billion in profits. And he invested $30 billion in capital expenditures. So for $66 million in compensation, the CEO generated $46 billion in profits. Is $400 million really that much when considered this way? Katie Couric’s offer from CBS is estimated anywhere from $10-15 million. How many jobs did she generate? What energy supplies is she providing consumers?
The pattern is both known and unfortunate: Take a predictable issue, heighten awareness – so far so good – but then engage in relentless discussion that provides no context, but finds a scapegoat. Blame the scapegoat – the oil companies – provide no solutions, and add insult to injury for the consumer.
We should not be surprised oil prices have gone up. The US is involved in a war in Iraq. Countries like Bolivia, Venezuela, etc. are creating uncertainty over global oil supplies. China, India, and the US economies are growing. And the US Congress took four years to deal with a comprehensive energy bill President Bush presented that included alternative energy exploration.
Perhaps we should consider the move by countries like Bolivia, Venezuela, Brazil, and China for a moment. All are moving toward some form of “energy nationalism” (as the Wall Street Journal calls it) or energy independence. In other words, we may be seeing a breakdown of the global energy trading system. This has consequences for global prosperity, and global cooperation. Such a move would send a bad signal to countries like Iraq who are just coming into the global system as a free and open society.
The United States needs to get off its American-centric view of the world, and re-engage and incentivize other countries toward the global energy trading regime. Critics need to quit blaming oil companies for their own countries’ woes, and work constructively together.