DEMOCRATS ARE TARGETTING OIL COMPANIES
This is off my usual target of the Biden #MigrantFlights and I will have more (a LOT more!) on that do not worry! However, with all the noise coming from Democrats about oil companies and the price of gas I needed to comment. They are being completely hypocritical in their assertions. Yet that wasn’t enough for them and now Democrats have proposed legislation which is a pure ploy to gin up sympathy for the midterm elections in November. Democrats know they are likely facing a bloodbath at the polls and this nonsense is a Hail Mary by them.
Nancy Pelosi has stated “there is no excuse for Big Oil companies to profiteer, to price gouge or exploit families”. Chuck Schumer wants to drag Oil and Gas Company CEO’s before Congress to testify about prices.
Moreover, their proposed legislation “…would give the FTC and the state AG's increased authority, including civil penalty authority, to go after oil companies and retailers that are gouging their customers and would cover both wholesale and retail sales," House Energy and Commerce Committee Chairman Frank Pallone.
This is the LAST thing we need at a time when oil prices are already skyrocketing due to a variety of world market forces, as well as actions taken by the Biden Administration since taking office. As a reminder, Biden’s Executive Orders have hamstrung the US oil industry significantly.
In one year the US has gone from being not just self sufficient with regards oil production, selling excess oil on the world markets, to hoping that terrorist funding countries like Iran would sell us oil. Additionally, despite the sanctions the Biden Administration has placed on Russia, he negotiated to buy Russian oil outside of those same sanctions. The hypocrisy is staggering.
But of course, the Democrat politicians shouting from the rooftops about “price gouging” have been virtually silent on the Biden policies that have caused much of the price increases we are experiencing. Nothing but silence on the cancelation of the Keystone XL pipeline. More silence on Biden halting oil and gas leases on Federal lands.
But the key point here is are the oil companies actually gouging? I am certainly no fan of gas at $4.00+ a gallon. High gas prices are among the most regressive taxes there are. It harms low-income workers far more than the wealthy. Let’s face it, someone making $35,000 a year spending $20/week on gas feels it far more when it becomes $40/week than a person making $100,000 a year.
Before we start singling out the oil industry for “price gouging” we need to look at the facts. The US Oil companies being targeted do not control the oil industry. Worldwide in 2021, Oil industry revenues were in excess of $5 Trillion. The total sales for the 5 largest US Oil companies was $777.7 Billion. That means US Oil companies made up only 15.6% of global oil sales. Saudi Aramco, the Saudi oil company had sales of $1.3 Trillion, by itself.
Here are the sales and profit amounts for the five largest US Oil Companies for the past three years (all data taken from Yahoo Finance). You will see that the industry had significant losses in 2020 due to the impacts of the pandemic. Did politicians make speeches about the losses in the oil industry due to the shutdowns they enacted and forced on the country?
ExxonMobil, the largest US Oil company lost $28.9B in 2020. But of greater importance was the profit margins the company experienced: 11.29% in 2021, -16.2% in 2020 and 7.8% in 2019. The three-year average was 3.2%. Other companies experienced profit margins that were on both sides of ExxonMobil, some better and some worse, but not significantly different. For the US Industry as a whole the 3-year average Profit Margin was 2.0%. Is that price gouging? I provide some comparisons so you can make up your own mind.
Here is the US Retail industry:
Wal-Mart, the perennial target of Democrat politicians due to their size and the markets they serve, had an average Profit Margin over the past 3 years of 3.6%. So quite a bit lower than the Oil Industry. That average holds for most retailers with the one exception being Home Depot that saw significant increases and profits although their profit margins remained relatively stable, so it does not appear to be price gouging there either. The industry as a whole saw a 3-year average Profit Margin of 4.5%.
What is odd is why the Democrats left out the HighTech industry for any criticism. When it comes to price gouging they stand alone at the top of the pile. One has to wonder why given the margins as reflected below.
Apple by far exceeds anything seen in retail or in the “price gouging” oil industry with a profit margin in 2021 of 42.3%. Its 3 year average was 38.4%. The industry as a whole had profit margins of 33.25% in 2021, 28.7% in the pandemic year of 2020 and 27.7% in 2019 for a 3 year average of 30.2%.
Democrats are asking us to believe that when an oil company makes $2.00 on $100 in sales it is “gouging consumers” and they want to drag the CEO’s in front of Congress. But when Apple makes $42 on the same $100 in revenue, on an electronic device that has glass made by slave labor in China, that is okay and no criticism is warranted.
Interestingly the High Tech industry gave over $50MM to Democrats in 2020.
I guess a slave labor and price gouging of consumers can be ignored when they are paying Democrats that much.