When oil was pushing well into triple digits earlier this year, U.S. Sen. Dick Durbin, D-Ill., ripped into a panel of Big Oil executives, asking, "Does it trouble any of you when you see what you're doing to us?"
I'm not entirely sure what he meant by "doing to us," but I assume he was suggesting they were saddling the public with high oil prices, as if the CEOs had a dial on their desks used to ratchet up prices, presumably while sipping brandy and using a $100 bill to light a cigar.
Now that oil has plunged by almost two-thirds since peaking, and a gallon of gasoline can be had for under two bucks, I've yet to hear Durbin thank Big Oil for "what they've done to us," in this case ratcheting that magical dial downward.
I'm kidding, of course. I'm just trying to mock how ridiculous it was to scold companies like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP) -- which combined make up a spit of world oil production -- for the surge in oil prices.
Now that prices have plunged, no one seems to argue what controls prices -- supply and demand. Demand drops sharply thanks to the all-too-apparent global recession and, voila, $50-a-barrel oil! OPEC said as much when cutting production by 1.5 million barrels per day last month: "The financial crisis is already having a noticeable impact on the world economy, dampening the demand for energy, in general, and oil in particular." Surprise, surprise, supply and demand truly are what cause prices to ebb and flow.
When people are faced with a dilemma that might force them to alter their lifestyles, anyone but themselves becomes the apparent villain. Perhaps you'll remember that a mob of protesters burned an effigy of then-Federal Reserve Chairman Paul Volcker on the steps of the Capitol when he ratcheted up interest rates to wring out inflation that he had nothing to do with. The terrible irony of economic hardships like we're facing today is that the ones who can actually help solve the problem are bombarded with blame that just hampers their ability to do what's needed.
Let's also remember that if Big Oil heeded public demand to stop pouring money into dividends and share repurchases, and invest more in drilling when prices were $150 a barrel, they would have ended up blowing through mountains of cash on what would now be recognized as terrible investments.
Investing tons of money in an inflated market on the basis of short-sighted consumer demand without giving much thought to the future … hmm …. sound familiar? Substitute "SUVs" for "drilling" and you've just described part of what's flushing General Motors (NYSE:GM), Ford (NYSE:F), and Chrysler down the commode.
So, come on, Sen. Durbin … where's the thank you?
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