USA: Biden’s attempts to lower the price of fuel will not work. Here I explain why – 11.21.22 / Online Blog

21.11.22

With Kate Aronoff

Companies are like worms. Different types of worms serve different functions in nature, some more threatening

for people more than others. Their complex and flexible systems deserve a great deal of scrutiny because of how important they are to the world we live in.

Worms, for example, are an important food source for other living things and transform organic matter into valuable nutrients through constant eating and defecation. These vital functions make them one of the most important. important

of the planet.

All worms can be reduced to a few basic parts: a long, tubular body, mouth, intestine, and anus. Since they lack the brain and consciousness, they are driven mainly by external stimuli through the nervous system. Worms can detect light and sound and have a highly developed sense of touch and taste that alerts them to suitable and unfavorable environments. As far as we know, their only “desire” is to survive: Worms have no morals, only an innate will to venture out into the world, avoid danger, and reproduce. A tapeworm or tapeworm is not bad because it settles in your gut. But you definitely don’t want it to stay there. Likewise, companies cannot be expected to do anything but maintain their own existence. Therefore, morally compelling them to meet their energy security needs, lower fuel prices or cut emissions, for example, may sound rather odd. What aforementioned

Speaking about the exorbitant prices of the fossil fuel industry earlier this week, President Biden said, “The time has come for these companies to stop profiting from war and fulfill their responsibilities in this country and leave the country alone.” they continue to do well. But companies have no responsibility to the country or to the American people. Like worms, fossil fuel companies provide the world with an invaluable service: consuming crude oil and methane gas and throwing away a fuel source. Made a lot of money amid rising energy prices wonderful it does this: BP, Shell, Total, Exxon and Chevron made $58 billion in profits in the last quarter. Biden is seeking more funding to go into additional production and cost cutting. However, this does not depend on the managers of those companies. his main and probablyOnly

The legal responsibility lies with the shareholders who maintain the compost machine. They also tend to charge. So far, BP has repurchased $8.5 billion worth of shares this year, while Shell has repurchased $18.5 billion in addition to paying hefty dividends. Quarterly earnings calls — events that include a presentation by senior executives followed by an exchange with analysts and investors — show how this works. last call for benefits third trimester [mil millones de dólares] At Chevron, JP Morgan Chase analyst John Royall asked executives if they “created much more free cash flow than your dividends and buybacks at top prices.” Free cash flow can be spent another way, like the kind of productive investments Biden wants. The analyst continued: “So my question is,” he continued, “do you think you can go beyond 15?

Referring to the maximum amount that Chevron management said it would offer to buy back shares. Chief Executive Officer Mike Wirth responded responsibly. “Yes. John, we actually tripled our repurchase rate this year. We announced the first one late last year,” he said, adding that Chevron is “at an all-time high in terms of share repurchase rate.”

CFO Pierre Breber continued: “I would like to point out that we increased our dividend by 6% at the beginning of the year. We have been increasing our dividend by 6% compound annual growth rate for 15 years. First financial priority” (italics mine). In his own words, this is the “relationship between two capitalists”.Marx it can be tense. Biden sees fossil fuel companies as service providers whose main job is to provide fuel to their customers. However, they exist primarily to serve shareholders. Especially the managers of companies in the fossil fuel sector are increasingly disturbed by the developments. impressive amount of ownership and decision-making powerOwned by major asset managers like the Blackrock fund. (Fossil fuel-funded republicans have accused these companies of conspiring to impose a green agenda.)to go forward“;If only !). In any case, drilling, refining and distribution are accessories to returns – profits usually come from there, but these are given to investors “as compensation for having capital fully divorced from residual function.”Marx Looking at the pioneers of modern companies. In recent years, oil and gas investors hostage

that companies produce less and deliver more.

There is a way to isolate the energy sector from this dynamic that many governments around the world follow to distrust private investors to manage important national resources. Alongside the governments of Saudi Arabia, the governments of Mexico, Brazil, and Norway (to name a few) own controlling stakes in state-owned oil companies, giving them greater say over production and distribution.

Of course, Biden is not proposing a radical overhaul of private control of the US oil and gas industry: He will not lead an army of polluting worms anytime soon. His proposal last week called for an unexpected tax on profits, apparently designed to encourage companies to invest their excess cash flows into increasing production and lowering prices. That might anger fossil fuel executives, but it probably won’t worry them: An unexpected tax would face a fierce battle even in this Democrat-controlled Congress, which has little time to pass legislation in front of the Republicans, where they will likely demand a majority. one or possibly both rooms next week. this public property (ie expropriation), even if public ownership is possible, it will be just as difficult to sell politically. the most direct way

In this way, government balances—in theory at least—conflicting goals such as profitability, energy security, and climate over the long term.

For now, Biden appears to be limited to shaping the environment in which this country’s fossil fuel worms – owned by his investors – eat and shit. However, without a more believable threat, you won’t get very far in appealing to the hearts and minds that don’t.

Kate Aronoff

He is a writer specializing in climate change issues for The New Republic magazine. His latest book is “Overheated: How Capitalism has cracked the planet – and how we are responding” (2021, Bold Type Books).