3-21-08 by dugan
When you’ve got a product that the world can’t live without, it doesn’t pay to make more of it. That’s how Exxon sees it, as explained in detail in a Business Week story this week. The article acknowledges the difficulties oil companies face in dealing with various despots, who rule places where the oil is. But it also notes that Exxon is socking away tens of billions on stock buybacks, money it could spend on new oil sources. But the last paragraph is the real bottom line:
"Big oil companies can continually miss their targets or even target no growth and still shine on Wall Street due to the peculiar nature of commodity businesses. Less supply of a commodity means higher prices. Higher oil prices mean more profits for the oil companies. Exxon shares have risen 21% in the past year-and even closed a bit higher on Mar. 5, the day of its analysts meeting [in which it announced it would not increase oil production]."
It’s no wonder that Exxon has zero interest in green energy or renewable fuels. It’d just be competition. And it’s also no wonder that Exxon and its compatriots will spend what it takes to keep government from taking a cent of oil’s taxpayer subsidies to support green research and development. Politicians won’t turn their backs on Exxon and friends until voters demand it.