America’s last new oil refinery was finished in 1976. Consumer demand has gone up 25 percent since then. Other demands have increased, too, by government for multiple formulations and by environmentalists determined to prevent all possible damage to potentially endangered species.
Now we have $3-per-gallon gas, an increasingly perilous dependence upon foreign oil that threatens our national security, and record oil industry profits that fuel political grandstanding in Congress and the White House. For the moment, let’s just focus on those immense profits.
Exxon Mobil’s recent 8.5 percent profit margin is a solid return, but it trails other industries, notably financial services, software and pharmaceuticals. Thus, “windfall profits” tax proposals are as sensible as telling Microsoft it must give away every third copy of Windows XP.
But what to do with the profit? There are two things the oil industry must do with all that cash rolling in these days, starting with a crash program to build enough new refineries to increase the industry’s capacity to put gasoline on the market. Mention new refinery construction and all kinds of special interests go crazy, threaten lawsuits, organize demonstrations and clamor for media attention, which they generally get.
But that is precisely why it must be a crash program, with the federal government actively involved, not as a funder of new refinery construction, but as a land provider and cutter of red tape. The oil industry has the financial resources to pay for new construction, but as the American Enterprise Institute recently noted, only the federal government — the nation’s largest landlord — has closed military bases, abandoned Superfund sites and other isolated, barren real estate on which new refineries can be built in a crash program.
Second, the oil industry can and must invest in public education and new media. Windfall profits demagoguery succeeds only among the economically illiterate. Unfortunately, the oil industry has done a lousy job of explaining itself. It was not always that way. Old-timers will recall Mobil’s Herb Schmertz, the industry’s most savvy public relations executive back in the day. Schmertz marshaled the facts and aggressively took on the industry’s critics in every possible forum. He also used paid media effectively, as well as earned media.
Exxon Mobil Vice President Peyton Knight did a conference call last week with key bloggers but much, much more is needed to get the energy industry’s communications skills up to 21st-century standards. An American Petroleum Institute blog and an energy industry “truth squad” demanding corrections and setting the record straight, using RSS feeds to ensure timeliness, would be logical next steps.America’s last new oil refinery was finished in 1976. Consumer demand has gone up 25 percent since then. Other demands have increased, too, by government for multiple formulations and by environmentalists determined to prevent all possible damage to potentially endangered species.
Now we have $3-per-gallon gas, an increasingly perilous dependence upon foreign oil that threatens our national security, and record oil industry profits that fuel political grandstanding in Congress and the White House. For the moment, let’s just focus on those immense profits.
Exxon Mobil’s recent 8.5 percent profit margin is a solid return, but it trails other industries, notably financial services, software and pharmaceuticals. Thus, “windfall profits” tax proposals are as sensible as telling Microsoft it must give away every third copy of Windows XP.
But what to do with the profit? There are two things the oil industry must do with all that cash rolling in these days, starting with a crash program to build enough new refineries to increase the industry’s capacity to put gasoline on the market. Mention new refinery construction and all kinds of special interests go crazy, threaten lawsuits, organize demonstrations and clamor for media attention, which they generally get.
But that is precisely why it must be a crash program, with the federal government actively involved, not as a funder of new refinery construction, but as a land provider and cutter of red tape. The oil industry has the financial resources to pay for new construction, but as the American Enterprise Institute recently noted, only the federal government — the nation’s largest landlord — has closed military bases, abandoned Superfund sites and other isolated, barren real estate on which new refineries can be built in a crash program.
Second, the oil industry can and must invest in public education and new media. Windfall profits demagoguery succeeds only among the economically illiterate. Unfortunately, the oil industry has done a lousy job of explaining itself. It was not always that way. Old-timers will recall Mobil’s Herb Schmertz, the industry’s most savvy public relations executive back in the day. Schmertz marshaled the facts and aggressively took on the industry’s critics in every possible forum. He also used paid media effectively, as well as earned media.
Exxon Mobil Vice President Peyton Knight did a conference call last week with key bloggers but much, much more is needed to get the energy industry’s communications skills up to 21st-century standards. An American Petroleum Institute blog and an energy industry “truth squad” demanding corrections and setting the record straight, using RSS feeds to ensure timeliness, would be logical next steps.
