I'll start my blogging career proper with a subject that has been a source of much discussion in my family and the news media for decades, the oil companies.

I get a little tired of the greedy oil companies rant.  All my life I've constantly heard how the rotten oil companies are just sticking it to their own customers (dad was a truck driver).  In the run up to the 2006 mid-term elections, I remember watching Bill O'Reilly excoriate an oil company spokesman for the "obscene" profits being made at the time.  As the spokesman kept referring to the profit margin and how much revenue the oil industry had to invest back into their very operations, Mr. O'Reilly kept badgering him over the raw numbers alone and wanted to know how oil company executives could possibly justify their personal and corporate earnings.

In my outrage, I sent an email to Mr. O'Reilly, asking him to publicly state how much he earned (and supply a justification), as well as the earnings of News Corp (his parent company) in both raw numbers as well as profit margin.  He never answered, but I ran across an opinion letter in the Deseret Morning News yesterday written by Don Colton, president of Pioneer Oil and Gas, that speaks to both issues.  Of specific interest is his first myth/fact statement regarding profits:

"The oil companies' profit margins are poor. They make about what a government contractor on a cost plus fixed fee (no risk) contract makes: 9-10 percent. As an example, Exxon Mobil's profit margin is 10 percent, Chevron's 8.1 percent and BP's 7.6 percent. These are the three largest U.S. producers.

In comparison, Microsoft makes 27.5 percent, Apple 14.6 percent, News Corp. 12 percent, Zions Bank 12.6 percent, Merck 18 percent and Intel 18.2 percent. The oil companies' profits are large only because they are large. They are not particularly profitable. The oil companies' profits are not yet sufficient to convince them to replace the aging refinery infrastructure of this country. Because of environmental restrictions, it takes more than seven years to site a new refinery. Both Exxon Mobil and Chevron conduct very little new exploration in the U.S. because of worries about environmental liability and the major delays caused by the green lobby.

From 1986-99 the price of oil, adjusted for inflation, was the lowest it had been since World War II. More than 600,000 people in the industry lost their jobs. Because of low margins, almost no upgrades or replacements were made to the refining infrastructure and very little on-shore exploration. Even at $100 per barrel, the price of oil adjusted for inflation is not as high as 1981."

There's more about shale development and who really controls fuel prices.  This theme has been stated over and over again by oil company executives and spokespeople alike.  But the tone-deaf media, our tone-deaf Representatives and an increasingly tone-deaf public continue to jump on the populist "obscene oil company profits" bandwagon without demonstrating much perspective.  We'll blindly accept that UFOs are real but won't look beyond an agenda driven congressional hearing or nightly news spot before concluding "oil companies bad, Al Gore good."

The reality is that petroleum will be a big part of our lives for a long time come and, if Mr. Colton is correct, Microsoft's profits are nearly three times "obscene" with nary a congressional investigation in sight.

In case the hyperlink above doesn't work, here's the url to the op/ed: http://deseretnews.com/dn/view/1,5143,695267426,00.html