The Corrupting Influence Of Oil Money

July 31, 2008
by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Brad Johnson



ENERGY
The Corrupting Influence Of Oil Money

The world has never looked better for the Big Five oil companies. This morning, Exxon Mobil, the world's largest corporation, announced its "second-quarter profit rose 14 percent, to $11.68 billion, the highest-ever profit by an American company. Exxon broke its own record." Joining Exxon Mobil as the only oil companies to "earn more than $10 billion in a single quarter, Royal Dutch Shell said its profit rose to $11.56 billion." ConocoPhillips and BP last week reported their "massive second-quarter profits." The fifth oil major, Chevron, will release its earnings report tomorrow. Yesterday, Interior Secretary Dirk Kempthorne announced "a new five-year leasing plan for offshore oil drilling" to give oil companies a "head start" on attacking protected waters, should the Congress follows President Bush, who recently lifted the presidential moratorium on offshore drilling "first issued by his father in 1990." Rep. Ed Markey (D-MA) described Kempthorne's announcement as a "Going Out of Business Sale" on behalf of Big Oil. The unprecedented profits for Big Oil come at the expense of practically everyone else in the form of a collapsing economy, international instability, rampant commodity inflation, and deadly climate change. However, Big Oil's windfall has also meant largesse -- and criminal levels of corruption -- for some in Washington.

RECORD PRICES, RECORD PROFITS: Since 2001, gasoline prices have more than doubled, and oil companies have made more than half a trillion dollars in profits. The price of oil has surged from below $30 a barrel to over $125, a fourfold increase. The Big Five oil companies could make a "projected $168 billion in profits" this year alone. The United States has only two percent of the world's oil reserves but consumes 25 percent of the world's oil. "At current oil prices," conservative oil man T. Boone Pickens argued, "we will send $700 billion dollars out of the country this year alone." If we continue on the same path for the next ten years, "the cost will be $10 trillion -- it will be the greatest transfer of wealth in the history of mankind," he added. The surging price of oil is due in part to demand growing faster than supply, but also to factors such as "the war in Iraq and the value of the dollar" and unregulated, Enron-like speculation. Instead of investing in 21st century energy, the oil companies are plowing most of their profits into stock buybacks, a windfall for their rich investors.

OIL'S GIFTS: In a "state-shattering tremor in an earthquake of change in Alaska politics," Sen. Ted Stevens (R-AK) "was charged on Tuesday with concealing more than $250,000 worth of gifts, including home renovations, that he received from an Alaska oil services company," VECO Corp, "the top Alaska-based contributor to federal politics for at least five election cycles." The federal indictment "accuses Stevens, a former chairman of the powerful Appropriations Committee and the longest-serving Republican senator ever, of using his position and office in the Senate on behalf of VECO between 2001 and 2006." Uncle Ted's indictment represents the culmination of a multiyear oil corruption scandal of Alaska's "bullying, nepotistic political culture": five state legislators (including Stevens's son Ben), four other officials, and Alaska's congressman Don Young (R) have also been implicated for their involvement with VECO CEO Bill Allen (Allen once told a state lawmaker, "I own your ass"). Over his career, Stevens has funneled over ten million dollars from his oil-funded war chest to other conservative politicians. Politicians who benefited from the $340,000 in campaign contributions from Ted Stevens's Northern Lights PAC this year alone are being pressured to return the money. Senate conservatives met yesterday to fill the positions vacated by Stevens, whose indictment forced him to give up "his plum committee posts."

MCCAIN'S EMBRACE: On June 13, 2008, Sen. John McCain (R-AZ) declared, "I am very angry, frankly, at the oil companies not only because of the obscene profits they've made but at their failure to invest in alternate energy to help us eliminate our dependence on foreign oil." Since then, McCain's tenor on Big Oil has completely changed, now championing the views of "oil executives." "My friends, we have to drill offshore. We have to do it. ... The oil executives say within a couple of years we could be seeing results from it. So why not do it?" he said recently. McCain's reversal took place on June 16, when he headed to Texas for oil-sponsored fundraisers and "declared support for offshore drilling." In the following month, his campaign's embrace of a Big Oil agenda has grown tighter. The campaign arranged an oil-field photo shoot after McCain had to cancel a planned visit to an oil platform in the Gulf of Mexico because of a hurricane and an "untimely" oil spill. And Big Oil has embraced McCain, now that he has climbed aboard the Big Oil express. The day after his speech, "McCain raised $1.3 million at a closed-door luncheon and reception at the San Antonio Country Club." The Washington Post reported recently, "Campaign contributions from oil industry executives to Sen. John McCain rose dramatically in the last half of June. .. Oil and gas industry executives and employees donated $1.1 million to McCain last month -- three-quarters of which came after his June 16 speech calling for an end to the ban -- compared with $116,000 in March, $283,000 in April and $208,000 in May."