There’s a new oil company ad that attempts to calm an outraged public with an outright lie. The public is, of course, outraged over the high cost of gas while oil companies enjoy record profits. The ongoing lie has been that oil company profits go into oil exploration.
Chevron is running an ad where an engineer of the company says, “Every penny and more went into bringing energy to the world.”
Common sense and a basic knowledge of industry tells us its a lie. A significant amount of those profits would certainly go toward:
- Stock dividends and stock buyback programs
- Payroll, including massive executive bonuses
- Employee benefits, including healthcare, retirement programs, tuition reimbursement, etc.
- Sales team expense accounts
- Country club memberships, company cars, executive retreats
In 2005, one energy analyst said, “Exploration and production will account for 75 percent of Chevron’s spending.” A January, 2011 article says, “In an explanation of the company’s (Chevron) $22 billion in expenditures, $17.1 billion is upstream (exploring for energy), $4.4 billion is downstream (refining), $302 million is in chemicals, and $405 million is in “other”.
In any case, when any oil company says, “Every penny and more went into bringing energy to the world” it is lying to the public. Not that this should surprise anyone.