You can always tell an election year. Whether it’s in the state capital or Washington, politicians find someone to blame for whatever the current crisis is.
Nationally, Republicans and Democrats up for re-election are criticizing America’s oil and gas companies because they are profitable, or ” more correctly ” too profitable! Call me crazy, but isn’t that the point of capitalism? Never mind that China, India and a host of other countries are consuming oil and gas at a rate never before imagined. The laws of supply and demand work. American energy companies have drilled all over the world, and now some of these developing nations are making it more difficult, expensive and politically challenging.
Richard Nixon talked about making America energy independent in the early Seventies, yet we’re no better off today, and by some measures, worse. Congress has fought exploration in Alaska and offshore, and a variety of government agencies and regulations have made it nearly impossible to construct a refinery. If supply isn’t keeping up with demand, is it any wonder energy prices are increasing?
Of course, Oklahoma sees $100-per-barrel oil and $8-$10 natural gas prices differently than much of America. The state’s oil and gas companies have helped fuel revitalization. For the first time in decades, downtown Oklahoma City will be getting a new skyscraper thanks to Devon Energy Corp.’s success. Look at the renaissance around the Chesapeake Energy Corp. campus at N.W. 63rd Street and N. Western Avenue, and tell me high gas prices are bad. Stripper wells that were dormant when we had $20 oil and $2 natural gas are now making real money for many farmers, ranchers and royalty owners.
Ask people in America who have a 401(k) if they want to give back the earnings they received from oil and gas stocks that have doubled and tripled over the last few years. While many parts of the country are seeing housing values decline, Oklahoma’s housing market has remained robust thanks to the wages, royalties and business generated by its energy industries.
None of us likes paying $3 a gallon for gas. Yet we’re our own worst enemy, because we’re more into style and speed than fuel economy. If Congress is so hellbent on lowering the price of gas, it could reduce the gas tax. But it would rather criticize one of our nation’s most successful industries. By the way, if a company did purposely set out to be less profitable, shareholders would be justified in demanding management be fired. We invest in stocks and a 401(k) expecting companies to maximize, not minimize, the return on our investment.
If Congress really wants to attack a problem, it should stop wasting time and money on steroids in baseball and focus on Social Security and Medicare. Congress knows both will be bankrupt when nearly 70 million baby boomers hit mid-retirement. Yet neither the Republicans nor Democrats have done a thing to head off this financial disaster. If energy companies or other American businesses wasted shareholder money the way the members of Congress waste taxpayer money, they’d be fired. On second thought, maybe that’s the solution voters should apply to Congress.
Orza is dean of the Meinders School of Business at Oklahoma City University.