The Goat Pen

>Obama loves big oil!

We all do. We're addicted to their stuff.

Well, Dora, it seems that you've taken my original point (that Bush and Obama have been portrayed very differently on the subject of high gas prices) and managed to reveal a disagreement about whether or not the POTUS has any influence whatsoever over the price of gas in his own country. On that point, we will have to agree to disagree, as they say.

I do agree with you about political chaos in the Middle East playing a part -- I said as much right from the start. There are a lot of factors. It's very complicated. I stand by my original point, however. When gas prices soared during the previous administration, Bush was widely portrayed as being a "Texas Oil Man" beholding to "Big Oil". The implication was that, not only could he have intervened to lower prices if he had wanted to, but that he was actually involved somehow in artificially keeping the prices high. By comparison, Obama seems to be getting a free pass on the subject altogether.

I also agree with you about focusing on alternative energies. This is one area where I actually had some (obviously misplaced) optimism that Obama might make progress.

So how do you explain gas going back down to $2.85 after $4+ gas under Bush? Why would the oil companies let that happen?

It was either:

1. Bush getting on the phone with old fraternity buddies and yelling, "Hey Biff and Skip, cut it out! I'm trying to get re-elected!!"

OR

2. "Okay boys, we've had our fun. But the party's about over. If we keep this up much longer, there won't be anybody left with a job to buy our stuff. Let's just give'er a rest and do it again in a couple more years. I'm taking my Gulfstream down to the Caymens to buy me another island. See ya in Augusta next month for our regular golf game. It's been real. Hook 'em Horns!"

When gas prices soared during the previous administration, Bush was widely portrayed as being a "Texas Oil Man" beholding to "Big Oil". The implication was that, not only could he have intervened to lower prices if he had wanted to, but that he was actually involved somehow in artificially keeping the prices high. By comparison, Obama seems to be getting a free pass on the subject altogether.

The different reactions are due to the different backgrounds of the two presidents. The Bush family had long-term ties to the oil industry & that is why there was the perception of being in bed with the oil companies. Obama has no such historical ties. But, because his father was an African & a Muslim, he gets all the crap about being a Muslim & whether he was born in the US.

I get that. Both characterizations are inaccurate and unfair, IMO.

Bush's "oil" gravitas probably cost him a Nobel.

Ugh...please, let's not get started on the Nobel.

And oh, Hack, it's nice to meetcha!

You, too, Dora. I enjoyed the chat.

Don't stop.....oil down bout $6/bbl....

Fully $5.7 billion of Exxon's profits went to buy back its own stock - and the company announced that it expects to buy back yet another $5 billion in the second quarter of the year. From the viewpoint of the company's CEO and top brass, these stock buybacks have all sorts of particular advantages. Top execs, after all, often get significant stock options. If stock prices don't go up, such options are worthless. By contrast, the higher the stock price goes, the more valuable the option. (Exxon's stock is up 32 percent from 6 months ago).

Companies that buy back their stock can either retire it or simply keep it themselves, under the control of the board of directors, to reissue or award as bonuses.

Dividends, by contrast, are not nearly as good a deal for company executives. For one thing, they are taxed as income. An increase in the stock price is not taxed as income; it's not taxed at all until the stock is sold - and only then at the capital gains rate, which is limited to 15 percent. (Fifteen percent would be a lot for a median American family, which pays less than 5 percent of its income in federal taxes. But it's a huge break to those paying income tax at the highest marginal rate of 35 percent).

"Buying back shares benefits existing shareholders, no one else. And more than anyone else, it benefits existing management," says Henry Banta, energy industry analyst with the Washington D.C. law firm of Lobel, Novins, and Lamont.

There's another thing the big oil companies are doing with their profits: they're hoarding them. If precedent holds, as soon as oil prices started shooting up again, a lot of that money started going into the bank for safekeeping - and adding yet more to the $1 triillion or so in coprporate cash lying fallow and slowing the recovery.

And as it happens, a not insubstantial chunk of last quarter's profits were a direct gift - from the taxpayers. Somewhere between $4 billion and $9 billion in profits were a direct result of federal tax subsidies

I totally agree with PNNery on one thing: it is insane that we have so much oil in our own backyard (e.g. ANWAR, Gulf of Mexico, etc.) and the federal government won't let the oil companies drill it. The environmental impact is microscopic compared with the benefits if we would get with robust drilling. Instead, our whole economy is at the mercy of the most anti-American and unstable region in the world.

I am 100% Drill Baby Drill.

"Buying back shares benefits existing shareholders, no one else. And more than anyone else, it benefits existing management,"

I guess the assumption is that existing management are shareholders in order to throw them in after that dastardly "and no one else" line. I'm curious how many people beyond "existing shareholders" do you think the company's decisions should "benefit"

I'm curious how many people beyond "existing shareholders" do you think the companies decisions should "benefit"

Well, I can't "speak" for Henry "directly", but I'm guessing he meant that XOM could have used that money for methods that would increase efficiency and/or production...instead of just artificially increasing earnings per share.

I got a kick out of one oil company cheerleader's take - that while the profits may seem obscene to the untrained eye...the fact that the dollar is weakened means that, it real terms, those profit numbers are only modestly obscene.

So they've got that going for them.

Professor Tiger wrote:Another difference is that Obama can point to the unrest in the entire Middle East, and the off-line oil production in Libya in particular, as reasons for the skyrocketing price of gas. Also, unlike Bush and Cheney, his friends and fellow board members re not being enriched by the situation.

But I didn't believe the nonsensical excuses for $4+ gas under Bush, and I don't believe the nonsensical excuses for $4+ gas under Obama. Gas is $4+ because the oil companies can make it so, and make mind-boggling profits in the process. It's really no more complicated than that.

There's absolutely no reason for whoever has stolen Prof's log in... That's two lucid comments in less than a week.

I MAR a lot but I call bullshit on that.

LMBOMA!

*googy-eyed*