How Big Oil Is Robbing The Federal Treasury — And You
When you’re undergoing a dental procedure, there’s one thing you never want to hear you dentist say: “Oops!”
It’s also alarming to hear that from a former senator 25 years after he passed a temporary subsidy for Big Oil. With world petroleum prices low at the time, Sen. J. Bennett Johnston of Louisiana pushed through a special break in 1995, temporarily exempting the giants from paying federal royalty fees for the publicly owned crude they took from the Gulf of Mexico. The idea was to cut our dependence on the Arabian cartel by giving oil corporations a brief reprieve on royalties so they would drill here.
But — oops! — our lawmakers made a big (and costly) slip-up: They forgot to specify in the law that the exemption was temporary. Republicans and Democrats had agreed that when market prices recovered, the corporations were to resume payments to us taxpayers. “It was never the intent that everybody would get a free ride forever,” says an official who was involved in the original negotiations.
Sure enough, market prices had recovered by 2006. But “greed” is both the industry’s motto and its modus operandi, so the oil barons that had benefited from this public generosity in their time of need have thumbed their nose at the public ever since, essentially saying, “Tough luck, suckers! There’s no limit in the law, so we’re just gonna keep sucking up all the oil we can without paying a dime in royalties.”
This is no petty thievery. Chevron, Shell, Exxon Mobil, BP and even China’s state-run oil corporation are among the giants that have taken at least $18 billion from our nation’s treasury so far. And their haul increases every day that they’re allowed to pump up profits through this unintended loophole.
The only thing bigger than Big Oil’s avarice is its arrogance. The industry’s lobbying front group has warned Congress not to try plugging the loophole, declaring that such an attempt would be “engaging in a dangerous game of bait and switch.”
Big Oil’s greed knows no bounds either. For example, Exxon, which banked a whopping $290 billion in sales last year, makes money the old-fashioned way: lying, cheating, exploiting workers, extracting subsidies from taxpayers, dodging taxes, refusing to pay for its pollution and other forms of corporate finagling.
But mighty Exxon now finds itself in federal court, finally called to account for lying to its own shareholders, the public and government officials. At issue are the true financial and environmental costs of the damages that its oil and gas operations are inflicting upon Earth’s climate. The legal case points out that it is perversely profitable to pollute if you don’t have to include the costs of those damages on your corporate books.
Technically, the charge is that Exxon kept two sets of financial books: one secretly acknowledging internally that its pollution was devastating our climate and would eventually cost shareholders a fortune, the other a rosy public presentation hiding those costs in order to claim that its fossil fuel empire was more cost-effective than wind, solar and other clean energy sources.
This blatant deceit has defrauded shareholders about the actual value of their investment, diverted public policy from necessary conversion to nonpolluting fuels and accelerated the radical impacts of climate change.
While the lawsuit filed against Exxon will largely focus on arcane aspects of securities law, it is fundamentally about corporate morality. As environmental activist Lee Wasserman recently put it, the case is a chance “for society to free itself from the grasp of this lethal industry,” adding that “we’re victims of a small group of gargantuan companies that recklessly and deliberately ignored the implications of their own science and worked to deceive the public.”
Indeed, their recklessness continues. Even though Exxon now admits the damage its products are causing, Wasserman notes, the careless behemoth “plans to increase its oil output by 25 percent by 2025.”
Of course, any monetary fine the corporation might have to pay is only a tiny fraction of its yearly income, so that’s no deterrent. The real punishment is that Exxon and its executives are tagging themselves as the same morally repugnant profiteers those in the soulless tobacco industry have been. One force bigger than Big Oil is an infuriated public. To learn more and to fight for our environment, go to https://www.SierraClub.org/topics/oil.
Populist author, public speaker and radio commentator Jim Hightower writes “The Hightower Lowdown,” a monthly newsletter chronicling the ongoing fights by America’s ordinary people against rule by plutocratic elites. Sign up at HightowerLowdown.org.