This is a few days late, but ebtween Blogger being down and my schedule having been nuts recently, I'm just getting to it.
Let us take a minute, then, to stick up for the big guys and ask, what's wrong with large profits for large oil companies? If a healthy profit margin--about 10% for the oil giants--is a problem, it comes with a built-in solution. Large profits create large incentives to increase supplies, build more refining capacity, and create new technology to meet energy needs. Exxon Mobil's profits alone in the first quarter of this year are four times as large as the $2 billion exploration tax credits stuffed into last year's energy bill. It's not a coincidence that more than 70% of the money spent researching new fuels comes from oil companies, not to mention the cost of drilling new wells, exploring new fields and developing technology and techniques to extract crude from fields previously considered exhausted.
Fat profits also allow American companies to keep and even expand their workforce inside the U.S. The problem isn't oil company profit, but rather the price of a gallon of gasoline and the negative effect that has on family budgets and the political crisis that creates. But that too will create political pressure that could be used to finally make the hard choices for a more rational energy policy: One that involves more drilling (Artic National Wildlife Reserve, here we come) as well as more efficient uses of energy.
High gas prices aren't easy on consumers. Most households could find a much better way to spend $1,000 than on filling up the tank. But if there's a better way to restructure the energy market, expand supplies, and create a long-term source of stable and affording fuel, we haven't found it yet. We've tried ethanol subsidies, "windfall profit" taxes and other market manipulation tricks. None of them have primed the gas pump for lower prices. Now it's past time to drill. With a barrel of crude selling for more than $70, Congress could let the market work. There's now plenty of incentive to give ANWR's caribou a few derricks to look at.
High profits tell a company that their services are in demand, so they look for ways to expand their offerings. This can lead to (in this case) greater oil exploration, increased refinery capacity, research into alternative energy sources, and other things I'm not thinking of. High profits now will lead to lower prices later due to increased supply later, if we don't allow politicians to screw it up while acting "on our behalf."