JULY 31, 2011
BRUCE A. BRENNAN BLOG FROM THE WORLD AND MY MIND
The news as I see it and the views as I want them.
July 31 is … Parent's Day
Mother’s Day and Father’s Day aren’t good enough. We have to combine them for Parent’s Day. It sounds like Congress formed a Committee to determine the best way to celebrate parenthood; we ended up with three separate holidays. What a waste of time and effort.
Tiger Woods is going to play in the PGA tournament next week and in the PGA Championship, the final major of the year, the following week. He needs to earn significant money to become eligible for the FedEx Championship series at the end of the year. He needs the exposure to keep his sponsors happy. He has lost most of them.
Perhaps the Big Oil Five oil companies should run our entire economy instead of just the large portion they do. The sputtering economy, high unemployment rate and punishing gas prices are taking a huge toll on average Americans, but at least somebody is doing well: The Big Five oil companies this week announced they had made a whopping $36 billion in profits in the second quarter of 2011.
According to second-quarter earnings reports, ExxonMobil alone made $10.7 billion in the most recent three months. That's a 41 percent increase over the same period last year and a 161 percent increase over 2009. Shell nearly doubled its profits year over year, taking in $8.7 billion in the second quarter. Chevron's profits were $7.7 billion, up 43 percent. BP earned $5.6 billion, a far cry from its $17.2 billion loss a year ago. Only Conoco Philips, with $3.4 billion in earnings, posted smaller profits than a year ago, dropping 18 percent due to the jettisoning of some Russian assets.
A good chunk of these profits is coming right out the pockets of the American public, thanks in part to astronomical gas prices and to $4 billion to $8 billion a year in deficit-increasing tax subsidies that oil companies continue to get, long after the incentives those subsidies were designed to create ceased to make economic sense.
Rather than invest their profits in such things as product development, new facilities, hot talent or research -- things that could create jobs, improve consumer offerings and accelerate alternative energy production -- three of the five big oil companies are spending large amounts of that money buying back shares of their own stock. Exxon spent $5.5 billion -- or more than half of its total profits -- to buy back its own stock in the second quarter; Chevron spent $1 billion, or 13 percent of its profits; and Conoco spent $3.1 billion -- or 91 percent of its profits. The numbers were similar last quarter.
"What this means is these companies see their profits as a way of managing their stock price, rather than investing money in the future of their own companies and the future of the economy," said William Lazonick, a professor of economics at the University of Massachusetts, Lowell.
I know big business gets blamed for much of our economic woes but they are playing by the rules Washington makes for them. Additionally, these publically traded companies are owned by Americans or can be, so these profits help Americans. There is no hidden bid corporation purgatory this money goes into never to be seen again.
The biggest problem with the oil companies announcing these profits now is timing and perception. The PR people dropped the ball here. They should have delayed issuing these reports or issued preliminary reports understating profits and issued final reports in a few months. The government does this all the time as it did this week. Our government overstated growth for the first quarter and corrected it this week. This is a common practice in Washington.
Just a couple of thoughts I had and you should too or at least think about.
BRUCE A. BRENNAN
DEKALB, IL 60115
VISIT ANY OF THE SITES LISTED FOR REVIEW, RESEARCH, ORDERING MY WRITING PRODUCTS OR TO CONTACT ME.
Go to web sites below to buy books by Bruce A. Brennan. It is still a good time to purchase any of my books. The books are interesting and inexpensive reads. My third book should be available later this year, in late 2011. More information will be forthcoming.
www.ebookmall.com (Do search by my name or book Title)
www.barnesandnoble.com (do a quick search, Title, my name)
www.smashwords.com Do a Title or author search.
Holmes the Ripper
A Revengeful Mix of Short Fiction
"The respect of those you respect is worth more than the applause of the multitude." - Arnold Glasow