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11 Mar 2012 - Enough is Enough!

I really do believe in free enterprise and capitalism, but there are times when, in this system, things get totally out of balance. That time is now for the oil industry. My message to the oil industry. . .ENOUGH IS ENOUGH! I really see no justification for the sharp increase in the cost of gasoline, diesel fuel and other energy products.

Frankly, I no longer believe analysts or any spokesmen for oil companies and the reasons they use to justify the cost increase. They use ‘supply-demand’ as a reason. I have not seen a sharp cut-back in supply or large increase in demand to justify the increase. They talk about tension in oil producing countries of the world, like Iran, but again I haven’t seen that have a major impact on the supply of energy.

But there is something that doesn’t lie, and that is the earnings reports of the oil companies. Professor Ira Kalb of the Marshall School of Business at the University of Southern California recently wrote a paper entitled “The Only Reason Gas is $5-A-Gallon is Oil Companies Have Convinced Us Prices are Out of Their Control”. He wrote about the tremendous profits the oil companies have racked up since the turn of the century.

Kalb stated that in the past decade, the top five multi-national oil companies approached a trillion dollars of profit. . .in just 10 years! Plus you look at the most recent earnings reports and you tell me where the dollars are going. They are not going to explore, they are not going to find alternative sources of energy; they are going to the bottom line of the oil companies.

The #1 oil company in the U.S., EXXON MOBIL - 4th quarter profit up 53%, strongest quarterly profit in two years; #2 - CHEVRON - 4th quarter earnings up 72%; #3 - CONOCO PHILLIPS - quarterly profit up 46%.

Not only are we paying inflated prices at the pump, but as tax payers, we are providing oil companies with another $4-billion in subsidies to find alternative energy and drill for oil. We have ended the subsidy for ethanol producers, why not do the same for oil companies and let them use some of their profit dollars for exploration.

The problem for all of us goes far beyond the gas tank. Think about this, U.S. farmers will plant and harvest 257-million acres of major crops this year, requiring one to four machine trips across those fields. Imagine what the increased energy cost will do to the price of everything we consume; so when you go into shock over the size of your next grocery bill, don’t blame farmers and ranchers, put the blame where it belongs...on the oil companies.

My message to big oil....ENOUGH IS ENOUGH!

My thoughts on Samuelson Sez.