Big Oil Profits Go To Investors, Not R&D

More Than Half The Money Made By The Five Largest Oil Companies Goes To Stock Buybacks And Dividends

(AP)  As giant oil companies like Exxon Mobil and ConocoPhillips get set to report what will probably be another round of eye-popping quarterly profits, just where is all that money going?

The companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.

It's good news for shareholders, including mutual funds and retirement plans for millions of Americans, but no help to drivers already making drastic cutbacks to offset the high cost of fuel.

The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University's James A. Baker III Institute for Public Policy.

The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.

The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits. ConocoPhillips is scheduled to kick off the latest round of Big Oil earnings reports Wednesday.

Oil prices are set on the open market, not by the oil industry. But that hasn't stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.

In the first three months of this year, Exxon Mobil Corp., the world's biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.

ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion - nine times what it spent on exploration.

Stock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company.

But some critics say Big Oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price.

And in focusing on buybacks and dividends over exploring for new oil, some critics say, oil companies jeopardize its already dwindling share of world supply.

"If you're not spending your money finding and developing new oil, then there's no new oil," said Amy Myers Jaffe, an energy expert at Rice University who's studied spending patterns of the major oil companies.

[ontheleft]

They don''t need to spend money on exploration because they want to get the easy oil in the Alaska NWR and they have never been closer to actually getting their hands on it.

[dchu76]

The investers that are making the money must be the ones still driving the gas hogs
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Posted by lovesamerica at 06:36 PM : Jul 22, 2008


Nope, i used my substantial profits from oilsand stocks to pay for my downpayment on a condo downtown. Now i dont have a car, 6 min walk to work and live in the entertainment disctrict. Life''s great, i wouldnt even know the gas prices if not for the news, because i never walk past, or have to use a gas station.

[lochlan-2009]

If only everyone could get payed and bonuses in stock options like the upper crust.

[Syndicate]

Oh I forgot about the capital gains tax on the money the investors make and the income tax on the money the rough neck makes.

[Syndicate]

Why are people not outraged at the federal government? They have made more profits off of oil than all the oil companies combined and tripled. Hell the feds make more than the gas station owners on the gas that comes out of their pumps. Don''t even get me started on the sales tax on the fuel tax component of the price.

[l8c6]

Um, capitalism is what motivates people to work. The only blood here is the votes streaming out of the Dems.

Posted by AtheismWins

In your dinosaur brain this is for you true. You are out of line speaking for all people so stop doing it. It is not your place to do so. That is the perverse right wing republican protestant view of humanity that is, humans are selfish and motivated in such base ways. Do not project your immaturity onto others. We are not all the same, nor are we all motivated alike. You are clearly beneath the framers of the constitution of the United States. They could have pocketed all and established a kingdom for themselves but they did not.

It was proposed that the "white house" be called the "president''s palace" but the wisdom of the educated and enlightened of the time refuted that proposal and won.

[atheismwins]

Capitalism has an evil bloody antisocial history.
Posted by l8c6 at 06:53 PM : Jul 22, 2008
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Um, capitalism is what motivates people to work. The only blood here is the votes streaming out of the Dems.

[l8c6]

I''''m all for it I''''m one of the stock holders.

Posted by whiskyrocker

That''s fine, baby''s cry and their parents stick bottles in their mouths to pacify their hunger but if it weren''t for their parents they''d die.

Investors are like babies, they don''t see the big picture. They have no vision they just know they''re hungry, immature and if they whine a bottle will get stuck in their mouths. Visionaries see something much bigger than the needs of a few investors. This country was founded by some great visionaries who saw the folly of the old world and established a living constitutions that cleared the way for the western world to advance from the bitter roots of exploitation, raw capitalism and empire building. GOPers are regressive to humanity. Those who form the DNA of the GOP are antisocial, entitled, self-righteous ones who think they can own God too but they don''t, they are the anti-christ many of them waiting for the rapture.

[l8c6]

Punish the oil companies with more taxes and you will pay the price at the pump. The price of gas at the pump is not going to fall by puishing the oil industry.

Posted by whiskyrocker



It''s a little ludicrous to think a few capitalists can hold a gun to the lives of most of human inhabitants.

Labor is treated with absolute disrespect in the world of empire built on capitalism. Capitalism has an evil bloody antisocial history. Christopher Columbus was an evil man along with the cotton plantation owners. The remnants of their DNS continues to plague the western world. The right wing GOP party is regressive. Humanity must progress and it will with God''s help while the GOP minded look for the rapture they will fall behind.

[lovesamerica]

The investers that are making the money must be the ones still driving the gas hogs

[atheismwins]

You mean the Dems still haven''t done anything about supply and demand!?!

Just how many votes do they want to lose?!?

[beehive21-2009]

How much are the Oil Companies being subsidized,right now ? How many Billions ?

Oil prices are set on the open market, not by the oil industry. But that hasn''''t stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.
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The above statement is false. Many Traders are owned in part by the oil companies. And they have a big say into the price of crude.

For years, the oil industry and the GOP have been telling us that the oil companies needed these huge profits to find and drill for new oil. Nothing was ever said about these buybacks and dividends. Now we know better.

Posted by ramos937
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Not to mention what "selective maintainence shutdowns" of refineries and other manipulative devices may have on the price of gas.
When I read this headline - I had to chuckle...
My first thought was: "Why would they spend their own money on R & D when they can shakedown the taxpayer for that?"

[ramos937]

Oil prices are set on the open market, not by the oil industry. But that hasn''t stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.
--------------------------------------------

The above statement is false. Many Traders are owned in part by the oil companies. And they have a big say into the price of crude.

For years, the oil industry and the GOP have been telling us that the oil companies needed these huge profits to find and drill for new oil. Nothing was ever said about these buybacks and dividends. Now we know better.

[hasher47]

Capitalism....that''s what it is ALL about.

[gopack443]

I hope nobody really feel for the oil companies when they claimed they were reinvesting in searching for more oil. They are making plenty on profits just as things are why would they want change? As long as w''s war keeps going the prices will continue to be artificially high.

[forthepeopl1]

this say''''''''s it all. it''''''''s all about the wall street investors and mainly china,japan investor. the one''''''''s mr potatohead paulson sold them in his many years.

his head is on the chopping block and he is useing the americans tax payers to bail him out.
July 22 (Bloomberg) -- Treasury Secretary Henry Paulson, trying to persuade Congress to approve his rescue plan for Fannie Mae and Freddie Mac, said U.S. financial market stability is at stake and international investors are awaiting the outcome.

``This is about not only our housing markets, but it''''''''s about our capital markets more broadly,'''''''''''''''' Paulson said in an interview with Bloomberg Television today. ``This goes well beyond the two institutions -- Fannie and Freddie -- it has to do with investors in the United States and investors all over the world.''''''''''''''''

yep, we the people get f by whitehouse and congress again..thanks to americans not telling congress to get f on this idear. everyone should hold town by town rally,city by city rally,state by state rallys or completely stop working stop buying,stop them in their tracks.

come on america what will it take for you to stand up for your kids and grandkids futures..

[e-mail]



americans need to tell congress that the same investors that are putting americans on the streets, need to be told that it goes both ways, and americans are not going to bailout the same investors that started this whole thing in the first place

[ov442]

doesnt it seem like Bush and the GOP are panicking at the last minute here to get permits to drill in protected areas, and to get more goodies before bush leaves office? and yet still dont invest much in wind and solar energy, whilst state and local goverments do it themselves???

[ov442]

WHAT??? thats not Possible.!!! BIg OIL making BIG PROFITS off consumers, Handing over those BiG profits to its ownership instead of investing in their companies'' future with aggressive drilling on that 68 million acres of land and see already permitted...!!!! NO WAYY, woulda never guessed they did that.
Heck, i thought they were in business to lose money, and that they spent hundreds of millions in lobbying money to get back billions and billions in tax breaks, research money and ya know our cash so they could do their jobs..... and still give profits over to the owners... almost sounds like business policy.

I''ll Wager, that Big OIL CEOs, have planned this entire scenario for decades and pushed Bush into office with Cheney to mandate a perfect setting for such antics.

[libsluv2spit]

I''''m not complaining. Working in Calagary, Canada home of the oil sands is amzing right now. So much demand for workers, that coffee servers are getting 15$/hr plus signing bonuses. Professional workers easily 6 figure salary. There was an article last month about a welder making 350k in the year.

Also helps to invest in Oil Sands companies.


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Posted by dchu76 at 12:55 PM : Jul 22, 2008
+ report abuse


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cool now all they need now is for canadians to actually get off thier arses and work..

but then again, that is why they have such an unrestricted immigration policy..they need people to work..terrorists, criminals and illegals welcome..

BEST THING TO DO IS SPREAD THE WORD AROUND A LOT MORE..hope that mexicans and other south american illegals start going up north in droves..