Trying to Understand...

I read today that the CEO’s of the world’s largest oil companies are on Capitol Hill being harassed by lawmakers.

I’m curious why Washington thinks it’s a good idea to penalize the oil companies. In this so-call democratic and capitalistic society, it seems more and more that the most successful people and companies are being punished.

Of course, I don’t look at the oil companies as innocent victims, but I certainly don’t agree that they are the evil villains that Diane Feinstein makes them out to be.

When you hear that Exxon made $10 billion in profit in the first quarter, you think, “Wow! That’s a huge profit!” It is. But how much is the profit margin?

Think about it. How much money does Exxon have to spend to build an oil platform in the middle of the ocean? How much money does Exxon have to spend to build an oil refinery? How much money does Exxon have to spend to explore for new sources of not only oil but other energy sources? How much money does Exxon have to spend to turn a barrel of crude into gasoline? How much money does Exxon have to spend to ship that gasoline to the gas station on your corner? How much money does Exxon have to spend to maintain their gas pumps?

$10 billion in profit is huge, but so are the expenses. The profit margin for Exxon is somewhere around 10%. What is the margin for companies like McDonalds, Microsoft, etc.

Why isn’t congress interested in penalizing McDonalds? They say that the oil companies directly affect the American people. Doesn’t McDonalds?

Look, I’m not interested in penalizing any company. In the United States, successful companies should be rewarded for their success. Those huge companies provide thousands of jobs, and fund the retirement accounts of millions of people.

But let’s not villianize these oil companies. They do not set the price of oil. The price of gas is high, no doubt. But we live in a free market. Supply, demand, the cost of producing the product, and taxes dictate the price of gas.

Instead of slapping the hands of a few CEO’s, why doesn’t Congress address the real problem? Why aren’t they exploring ways to either increase supply (let us explore in our own country) or decrease demand (help fund technologies to reduce our need for oil).

The price of milk is also increasing, and yet I haven’t heard of any cries to penalize the dairy farmers.