Interesting story in Monday's Wall Street Journal about Exxon could have provided a good lesson for Kentucky politicians if they had been wise enough to listen:
"The Texas oil behemoth finds itself in such an enviable place because it never chased oil's recent bull run, though it earned heavy criticism for its restraint. In the past two years, as oil climbed near $150 a barrel, politicians called for Exxon to spend some of its riches ramping up production to drive down prices. Other oil companies grabbed expensive new assets that now will be a drain on operating income with oil selling below $50 a barrel."
"Exxon Chief Executive Rex Tillerson chose to sit on the sidelines, saying he thought oil prices were unrealistically high and would inevitably fall. As a result, he remained fiscally disciplined, giving the company ample room to weather the plunge in oil prices as rivals flounder."
"Mr. Tillerson made that point to reporters after a speech in Chicago in December. In the past year or two, he said, there were "some pretty high prices paid for some resources. [These companies] had to be operating with a very different view of future prices than we do.""
"Since the beginning of 2000, Exxon has increased its cash on hand to $36.7 billion at the end of September from $3 billion. It also began a share buyback program. So far, it has purchased 2.2 billion of its shares, which are now worth $170 billion, about the market capitalization of Microsoft Corp. or General Electric Co."
"Exxon is "sitting pretty," says Philip Verleger, an oil consultant and professor at the University of Calgary. "They have money and [now] there are a lot of companies that are desperate.""
Those of us who cautioned Kentucky officials about their spending spree over the last decade have gotten used to being dismissed as cranks and pessimists. Now, make no mistake, our advice is to avoid tax increases and to cut spending instead.
2 comments:
Exxon is a shining bastion of hope for all shareholders in companies with management that have no clue about capital allocation.
I guess Exxon Chief Executive Rex Tillerson can sit on the sidelines and gloat.
Big Oil has eliminated all competition from alternative energy sources. They started in the 1920s against alcohol-based fuels; again in the 1930s and 40s to thwart Henry Ford's idea of a car made of hemp and fueled by methanol from hemp.
The result? We have a war on drugs, which is primarily a war on marijuana--but includes all things hemp. All things hemp is classified in the Controlled Substances Act as a Schedule 1 drug.
Exxon is a shining bastion of greed and corruption at work--the worst of the "free market" mentality, which is nothing more than a license to plunder and exploit and eliminate competition.
As usual, BPB operates under the delusion that Big Money marketeers are angels. Never mind that in Federalist Paper 51, Alexander Hamilton and/or James Madison wrote:
"If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself."
BPB loathes and detests American values. That's the basis for conservative philosophy and Republican values.
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