Time to Rein In the Pump Profiteers

[one...two...tree 2,762]

By Chuck Collins and Eric Benjamin

Feeling a little squeeze at the gas pump? You are not alone -- U.S. consumers are expected to pay an additional $200 billion this year for oil and gas products.

These billions, notes Sen. Byron Dorgan, D-N.D., amount to a "massive transfer of wealth from average Americans who can't afford it to big oil companies who already were experiencing all-time record profits."

While ordinary Americans are forking over upwards of $3 for a gallon of gas, 15 distinctly unordinary Americans -- the CEOs of the largest U.S. oil industry companies -- are celebrating their biggest paychecks on record.

According to a new report, "Executive Excess," by the Institute for Policy Studies and United for a Fair Economy (PDF)], Big Oil CEOs last year took home an average $32.7 million in compensation -- 518 times more than average oil industry workers in 2005. The ratio for all industries in 2005 between average and highest paid worker was 411 to one, while the average globally in advanced countries is 25 to one.

The Oil Barons' grab even exceeded their excessively paid counterparts at other leading U.S. firms. Their $32.7 million average pay was almost three times higher than the average bloated paycheck of $11.6 million for CEOs at 350 large corporations surveyed by the Wall Street Journal.

The three highest-paid U.S. oil chieftains in 2005: William Greehey of Valero Energy ($95.2 million), Ray R. Irani of Occidental Petroleum ($84 million), and Lee Raymond, outgoing CEO of ExxonMobil ($69.7 million).

At the end of July, ExxonMobil reported a quarterly profit of $10.36 billion, the second biggest gain ever. This follows its record-breaking annual profit of $36 billion in 2005.

When ExxonMobil's CEO Lee Raymond was called before Congress to explain, he stated that rising prices reflect global supply and demand, nothing more. "We are all," Raymond assured Congress, "in this together, everywhere in the world." Except Raymond. Raymond recently retired from ExxonMobil with a Golden Parachute retirement package worth nearly $400 million, including country club fees and use of the company jet. "He is a porker of the first order," observed executive pay expert Graef Crystal.

ConocoPhilips CEO James Mulva explained to ABC News that oil companies only make ten cents on the gallon. High oil prices, not greed, are the cause of skyrocketing prices at the pump, he explained. Big Oil can't control the global marketplace.

But if Big Oil CEOs have no power to influence the cost of gas, then they don't deserve any special reward for industry profits. And even if their performance contributed to the company's profitability, shouldn't broader criteria be used to judge their performance, including their record on the environment?

With these enormous salaries, Big Oil CEOs should be held to account for their failure to dedicate their mountains of excess cash toward seeking new energy sources that move us beyond fossil fuels. They can run green-looking TV ads claiming they are indeed preparing for the future. But when they throw massive windfall profits at chief executives, they seem to be signaling that the coming lean years will be somebody else's problem.

What is good for ExxonMobil and Lee Raymond -- and all the other titans of the contemporary American oil and gas industry -- has not been good for average Americans. According to new wage data reported in the New York Times, "wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's." So what can be done about petrol profiteering?

One proposal is to tax oil industry windfall profits and earmark them for public energy conservation projects and efforts to reduce energy costs for the poor. Sen. Byron Dorgan, D-N.D., has proposed that a 50 percent tax be applied to profits earned by major U.S. oil companies on the sale of crude oil above $40 per barrel.

Another proposal is to eliminate government tax breaks and massive subsidies for big oil. The independent Taxpayers for Common Sense identified 16 wasteful subsidies for the fossil fuel industry totaling $5 billion a year.

Finally, Congress should take up the question of anti-trust laws in the face of oil industry consolidation. Not since the 1911 break-up of Standard Oil Co. has the country witnessed such a concentration of petroleum power, with 23 major mergers in the last decade.

Big Oil's grip on U.S. politics is strong. Since 1990, they've given $192 million to federal candidates and parties. They have blocked sane energy policy and investments that move our country beyond dependency on oil.

That's why a campaign organized by Oil Change International to "separate oil and state," and encourage members of Congress to give up their addiction to Big Oil political contributions is a key leverage point. It's a practical first step in stopping further looting by the pump profiteers.

Chuck Collins is a senior scholar at the Institute for Policy Studies and coauthor of "Economic Apartheid in America: A Primer on Economic Inequality and Insecurity" (New Press, 2005). Eric Benjamin is a research analyst at United for a Fair Economy.

[bebop + rocksteady 0]

I heard this morning on the radio that gas prices may be back down to around $2 by Thanksgiving? Top 40 radio isn't the most reliable news outlet in the world, but hey, it gives me hope.

Cass (bebop the great)

[mawilson 2,133]

Pump Profiteers? You think you're paying too much for gas? Give me a break, Steven.

Go to Europe where they have a 300 or 400% tax on gas, and the prices are well above

$6 (or even $7) / gallon (and have been for many years.)

[PlatyPius 5]

Difference is, it's higher in the UK and other European countries because of TAXES, as you mentioned, not CEOs getting rich.

Also consider that most of Europe has a public transportation infrastructure, while it's very rare to find that in the US. For the most part, people in the US HAVE to drive. Also consider that petrol prices in the EU and UK have been high for years. In the US, gas prices have increased 300% within 5 years.

I heard this morning on the radio that gas prices may be back down to around $2 by Thanksgiving? Top 40 radio isn't the most reliable news outlet in the world, but hey, it gives me hope.

Cass (bebop the great)

We topped out around $3.239 here in Indiana (regular unleaded). I filled up the Volvo on Monday for $2.52/gallon.

[bebop + rocksteady 0]

I filled up this morning at $2.59 in So. Indiana. About 15 miles north of Louisville.

Cass (bebop the great)

We topped out around $3.239 here in Indiana (regular unleaded). I filled up the Volvo on Monday for $2.52/gallon.

[*Robert* 2]

[jjjimmy 0]

Good post steve i think its crazy that we subsidise oil companys and after spending alot of time in brazil where they use 70% alcohal i dont understand why we dont use more of these fuels here in the states.

[bebop + rocksteady 0]

My Dad was telling me about this.

That it's AMERICAN companies that produce the Brazillian ethanol. And mostly AMERICAN companies that have been making the cars that run on this Brazillian fuel. So it's not like it's a foreign concept to the U.S. companies, it just hasn't been implimented (because that's not where the money is, eh?)

Cass (bebop the great)

Good post steve i think its crazy that we subsidise oil companys and after spending alot of time in brazil where they use 70% alcohal i dont understand why we dont use more of these fuels here in the states.

[rclouse 0]

I heard this morning on the radio that gas prices may be back down to around $2 by Thanksgiving? Top 40 radio isn't the most reliable news outlet in the world, but hey, it gives me hope.

Cass (bebop the great)

Yeah, I heard the same thing. Should be around $2.00/gallon right around electio... I mean Thanksgiving time.

[one...two...tree 2,762]

Pump Profiteers? You think you're paying too much for gas? Give me a break, Steven.

Go to Europe where they have a 300 or 400% tax on gas, and the prices are well above

$6 (or even $7) / gallon (and have been for many years.)

Why should the CEO salaries be so disproportionately higher than they were 40 years ago? In other words, what are they doing today as CEO’s that validates the higher ratio of pay then they ever made before historically? You can try to answer that question, but really there’s no logical reason for it – just pure greed.

[almaty 19]

I heard this morning on the radio that gas prices may be back down to around $2 by Thanksgiving? Top 40 radio isn't the most reliable news outlet in the world, but hey, it gives me hope.

Cass (bebop the great)

Yeah, I heard the same thing. Should be around $2.00/gallon right around electio... I mean Thanksgiving time.

[ChristinaM 0]

Big Oil CEOs last year took home an average $32.7 million in compensation -- 518 times more than average oil industry workers in 2005.

Based on that, that average oil worker is earning a little over $63,000 a year. That's not a bad salary either - I'd be happy if I made that....

Just thought that was interesting.

http://uk.theoildrum.com/story/2006/5/3/17236/14255

That's interesting too.

I envy those of you who topped out in the $2.something range. We topped out at $3.65 (or there or thereabouts) up here.

[Mr. Big Dog 10,747]

So, tax the super rich some more. It's not like taking away any money they "earned" - it's just taking back some of the money they grabbed from the rest of us...

But yeah, I can see the gas price dropping in the run-up to election day. Such scenario should remove any and all doubts even with the staunchest supporters of the guys currently running the show.

[one...two...tree 2,762]

Big Oil CEOs last year took home an average $32.7 million in compensation -- 518 times more than average oil industry workers in 2005.

Based on that, that average oil worker is earning a little over $63,000 a year. That's not a bad salary either - I'd be happy if I made that....

Just thought that was interesting.

http://uk.theoildrum.com/story/2006/5/3/17236/14255

That's interesting too.

I envy those of you who topped out in the $2.something range. We topped out at $3.65 (or there or thereabouts) up here.

The average is deceiving. Ratios are much more telling. If the ratio of pay from highest to lowest paid was 40:1 back in the 60's, but today is now at over 500:1 you have to ask why the change? Have the jobs of CEO's become much more important today while the other jobs became less important?

[ChristinaM 0]

It's not the ratio of highest to lowest, Steven, it's the ratio of highest to average. Big difference, and one which makes it even more scary.

I don't think that the oil industry is alone in increasing payments to CEOs; regardless of which industry they're in, the CEO of a major corporation is making more now than he ever did. I don't understand why either, but it's not something exclusive to the oil industry.