There is still much confusion about energy in this country. The culprits in this scenario are Senate Democrats who either are totally ignorant of energy economics or are just putting on a political show. Several weeks ago, Hillary Clinton and Chuck Shumer, both Senate Democrats, proposed on television that they both supported a plan to tax “excess profits” of Exxon-Mobil and place these “excess profits” in a fund to provide monies for research on alternative fuels and other ideas. My first thought was to look at the Value Line survey to see what these excess profits were and where they came from. The estimated profit margin for 2007 by Value line was 10.10%. The return on equity estimate for 2007 was 22.50%. Exxon Mobil employs 83,700 employees and has 659,000 shareholders. Salaries, wages paid to employees and dividends paid to shareholders provide substantial taxable income to the U.S. treasury. The growth in Exxon-Mobil’s business came about as a result of project startups in West-Africa and increased volume from Abu Dhabi. These so-called excess profits are being used to provide our country with a reliable source of crude oil. The question arises as to what “excess-profits” are. Who will decide what this figure is? It sounds like Hugo-Chavez and his attempts to run his country’s oil business into the ground.

      Some facts are the following:

• Oil prices are set every day on the NY Mercantile exchange and not by the oil companies. Check any financial paper and look for commodities and you can find the price range every day.
• Price of crude oil is about 75% of the price at the pump. The price can be influenced by the Mid-East oil ministers since they can lower or increase production. India and China are large buyers of crude.
• No new refineries have been build in about 30 years.
• The environmentalists have helped existing refinery profits since so many have shut down that the remaining refineries are booming.
• Price manipulation is not coming from this country but from the oil producers out of the country. One solution is to increase domestic oil production from areas like ANWR and off-shore. Guess who is against doing this? The same Senate Democrats that slam our domestic oil industry and have no alternatives to increased domestic production.

      Solar, windmills, alternative fuels are good ideas but will take time to take up the slack if we abandon petroleum as our major fuel. The battle for energy is shaping up as a political issue rather than one of economics and the American people do not understand the facts because of the mis-information the politicians are giving to the consumer.

Gary E. Marsella

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