Congress has become a bit of an American joke of late, given its perceived inability to get anything done on Capitol Hill. Despite this perception, oil and gas companies continue to spend millions of dollars lobbying our elected representatives in the hopes that they might have their way on a variety of issues -- the reason being, of course, that if one issue goes their way, it could mean a significant windfall down the road.
Earlier this year, The New York Times published some data from United Republic depicting lobbying's return on investment for a variety of industries. The oil and gas industry contributed $347 million to the 111th Congress (2009 to 2011), which generated $20 billion in subsidies -- a 5,900% return.
Given that companies rarely mention this lucrative strategy, it remains important for investors to take a closer look at lobbying, as its implications cannot be underestimated.
This year's love
Year to date, oil and gas companies have spent roughly $105.2 million lobbying various members of Congress and government agencies. That dollar figure ranks the industry third out of all American industries, behind pharmaceuticals and insurance. Leading the way in spending for all entities is ExxonMobil (NYSE: XOM ) , which committed $10.6 million in hopes of having things go its way. Here's a look at the top 10 spenders in the industry :
- ExxonMobil, $10.63 million
- Koch Industries, $7.97 million
- Chevron (NYSE: CVX ) , $7.53 million
- American Petroleum Institute, $6.67 million
- Royal Dutch Shell, $6.44 million
- BP (NYSE: BP ) , $5.57 million
- Occidental Petroleum (NYSE: OXY ) , $5.57 million
- American Fuel & Petrochemical Manufacturers, $3.49 million
- Marathon Oil, $2.96 million
- ConocoPhillips (NYSE: COP ) , $2.87 million
Clearly, there is a significant drop off from the beginning to the end of this list, which comprises about 56% of the total industry spend this year. The question now becomes: What issues are these companies spending millions of dollars advocating for or against?
Dollars for bills
The Senate's Lobbying Disclosure Act database is a treasure trove of information. That's where companies file LDA forms, which include information about how much they spend on lobbying, who their lobbyists are, and what they're lobbying for. Here's an example of some of the issues ExxonMobil pursued in the third quarter of this year:
- "HR 1947: Federal Agriculture Reform and Risk Management Act of 2013; provisions related to energy"
- "Discussions related to the Lesser Prairie-chicken"
- "Discussions related to National Ambient Air Quality Standards"
- "Discussions related to the Renewable Fuel Standard"
- "Discussions related to Fuel Quality Standards"
- "S. 1009: Chemical Security Improvement Act; provisions related to chemicals"
- "HR 624: Cyber Intelligence Sharing and Protection Act, 2013; provisions related to cybersecurity"
- "Discussions related to the National Institute of Standards and Technology Executive Order "
This is far from a complete list, but its entries range far and wide, really bringing home the point that there is an awful lot going on behind the scenes at these businesses, and lobbying disclosures give us great insight into many of the issues oil companies are facing.
It's always worth examining the LDA forms your company files to see what's going on behind the scenes. Companies don't disclose any lobbying initiatives in their quarterly or annual filings, so it's on investors to do some extra legwork to get the whole story. Flipping through these filings once every quarter or so can give you insight into the issues management thinks is necessary to shower in millions of dollars. Money talks, and if the LDA forms don't match up with what management has been preaching, you know there's a problem.
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