Virtually the same day that Exxon announced their gangbuster record earnings of $11.66 billion the New York Times ("Exxon sets profit record..." 2/2/08) reported that the Organization of Petroleum Exporting Countries (OPEC), having held production levels fast this month, signaled it would be ready to cut production when it meets next month to make up for a seasonal slowdown. "OPEC's actions mean the cartel is determined to keep prices from falling below $80."
Clearly OPEC is Exxon's greatest ally. It has been OPEC's collusionary cuts in oil production that permitted the price of oil to skyrocket. According to a newly awakened New York Times "from a low of around $50 barrel in early 2007 to near $100 barrel by the end of the year -- the biggest jump in oil prices in any one year" (in case you are counting, that $50/bbl difference annualized represents a transfer of wealth from American consumer pocketbooks to oil interests of some $350 billion, or the combined annual budgets for the Army, Air Force, Navy and Marine Corps). The Times finally and for the first time, is laying out the full dimension of the OPEC orchestrated increases, calling it the way it is as this post has done since inception.
Without the OPEC cartel rigging the market Exxon's windfall would not have been possible. President Bush and our Energy Secretary Bodman during their recent visit to Saudi Arabia, the putative leader of the OPEC cartel, pleaded with the Saudis to have their cabal increase production levels. Their pleadings were humiliatingly dismissed out of hand. Certainly Exxon must be cheering in the wings and lobbying to have the president continue his inane threat to veto any legislation that would remove the national sovereignty exemption that makes it impossible to sue OPEC and its national oil companies, such as the Saudi oil entity Aramco, in American courts for restraint of trade and collusion among oil producers. It is the kind of legal action that would be forcefully pursued by our Justice Department against any commercial entity/entities that acted in a manner comparable to that of OPEC and its national oil companies. But that's a long and disheartening story (Please see "Oil: A Defining Moment for Our Political Class and the Press," 07/09/07)
The Exxon earnings are not only obscene they are an outrage in that these are not profits that are earned in a competitive marketplace but simply by tailgating OPEC's manipulation. Exxon barely lifted a finger to earn its additional billions other than go along with prices that were the result of collusion by a cartel, and hardly a reflection of a free and unfettered international marketplace. The oil industry apologists are already lining up. To quote one of the spokesmen for the chief peak oil prankster, and cheerleader for ever higher oil prices, Matt Simmons, "A lot of these larger companies are challenged to grow production. That's one of the reasons that oil prices aren't necessarily expensive at $90 a barrel..." Much like Willy Sutton saying he has to hold up another bank because he needs a new getaway car.
At least one candidate was moved to opine on Exxon's earnings. Barack Obama said Exxon's profits were a sign that the U.S. economy is "out of balance". With that observation he will have in all probability kissed the moneyed oil lobbying kitty goodbye.
With distortions such as these lifted from the pocketbooks of all Americans, where are the tough questions and answers asked of the candidates as to how we as a nation are truly going to come to grips with this issue before we transfer all our wealth to the oil companies and our good friends in Saudi Arabia? (For some questions that might be considered please see "In 2008: A Few Questions On Energy For The Candidate," 12.31.07).