Oil Reaches Record High: Who's to Blame?

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  contrarian5909/12/07 Report as spam
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  Oil company profit

  Oil companies made lousy profits throughout the 1980s and 1990s, and had to conslidate to keep investors happy. They spend billions of dollars on exploration, with no guarantees the investments will pay off. When GE does this or Dell or Microsoft in their industries, we admire their foresight, risk taking and management acumen. When an oil company does it, we start belly aching about obscene profits because we feel we're entitled to cheap energy. Getting oil is not a Jed Clampett affair -- no one shoots at the ground and up comes bubblin' crude. It takes huge risky investment and an unbelievably varied number of skills ranging from the technical to the political. Yet over the last 20 years, oil companies haven't made anywhere near the profit margins of companies like Google or Microsoft. And that's how investors judge companies -- margins, not total profit. The history and statistics show that if the oil companies controlled the reserves of Venezuela, Russia and the Middle East, we'd have much cheaper energy now. Maybe cheap enough that we could extract the hydrogen from the oil and solve our global warming problem. But when you have OPEC seeing oil as their ONLY source of income rather than as a temporary foundation for developing a diversified economy, then oil is withheld from the market or it isn't developed at any where near the pace that Exxon, Shell, Chevron and BP pump their reserves.