With the abuses of overcharging outrageous and apparantly unending costs for gas, coupled with the apparant inability to regulate said gas prices or even to limit the price gouging, couldn’t the government seize the oil companies, break them up, and furnish gas/oil directly to the consumer under eminnt domain? (Under the premises that it’s for the public good, and to have some control over the cost?) Granted, it’s far from an ideal solution, but it seems the lesser of two evils, give the current state of affairs.
It’s difficult to answer your question as it is not even really valid.
Please provide evidence of overcharging and/or price gouging. Part of the reason for the large increase in the cost of a bbl of oil is due to the weakness of the Dollar right now.
What makes you think that the government is capable of drilling, pumping, refining, and distributing oil any more competently than the thousands of companies that do it now? And what makes you think any nationalization program in the US would affect foreign oil companies in Mexico, Venezuela, the middle east, Russia, etc.?
Furthermore, what evidence do you have that the current high prices of oil constitute price gouging or collusion? It seems to me that you’re basing this question off a rather large amount of unsupported premises.
In any case, what prevents the government from doing this, is:
- Nobody who matters thinks it’s necessary,
- There is enormous cultural antipathy (for good reason, IMHO) against nationalizing private industry in the United States,
- It would take an Act of Congress (see Youngstown vs. Sawyer),
- The Fifth Amendment to the US Constitution requires that “just compensation” be paid for private property taken for public use. How much tax revenue would the government have to collect to properly compensate the tens of millions of shareholders in all American oil companies for their loss?
- Foreign shareholders would be under no particular obligation to have their shares forcibly taken, compensation or no.
And that’s just off the top of my head.
Wouldn’t you consider the fact that the price of gas increases daily for the last several moths as “evidence”? As for the weakness of the dollar - that gets into a chicken-or-egg argument, which isn’t the question I posted.
Well, according to the constitution, private property cannot be taken for public use without fair compensation. So when the city takes your house via eminent domain they have to pay you market value for that house.
So to constitutionally seize Exxon, the government would have to buy Exxon from the shareholders, at whatever the market price for the stock is.
How much did you want to spend on this project?
Venezuela has attempted precisely that and it has proven ruinous to their actual production of oil. In brief, getting oil out of the ground isn’t cheap or easy, and governments are not as capable of doing it as private companies are.
Furthermore, when the market isn’t allowed to react to a certain level of demand or supply through changing prices, shortages almost universally result. This has also happened in Venezuela.
So the short answer, is that even if the government legally could, it wouldn’t be a good idea in terms of increasing the nation’s ability to have petroleum products when they needed them.
To put it bluntly, you have at best an incomplete knowledge of economics and in all likelihood, no idea whatsoever how capital, corporations, and our economy in general works. To try and educate you is beyond the scope of this thread. Pick up some econ texts, read them and then come back when you understand and can coherently you can begin to discuss the underlying principles that affect the end results you are complaining about.
You clearly need a significant amount of education on the topic. There is an interesting thread in the Great Debates forum that would be useful for you to read.
Because it’s the oil companies who have seized the U.S. government instead.
Correct me if I’m wrong, but doesn’t the concept of eminent domain only apply to real estate? I don’t think you can seize the assets of an individual or corporation for the public good.
Also, keep in mind that companies like Exxon and Chevron are really only middlemen in the oil business. They buy their oil from production corporations like Gazprom, Iraq National Oil Company, Kuwait National Petroleum Company, National Iranian Oil Company, Nigerian National Petroleum Corporation, Perusahaan Tambang Minyak Negara, Petroleos de Venezuela, Petroleos Mexicanos, Saudi Aramco - companies that are already virtually owned by a government, just not ours. Seizing the assets of a foreign government in their own country would take more than a court order.
Also a good Pit thread.
Because when prices kept rising (and they would), the congressmen who voted for the seizure would not be able to blame anyone but themselves.
Wow. This is not even close to being correct. Exxon and Chevron are just middlemen? That’s preposterous. Exxon produced over 4 million barrels of oil equivalent per day in '07. Chevron produced over 2.5 million barrels of oil equivalent per day. The majority of both company’s earnings come from their upstream operations. They are major producers with enormous reserves. It would be a true statement that they do not dominate worldwide production. It would also be true that some of the national oil companies, like Aramco, produce more. It is absolutely crazy to state that they are middlemen and that they just buy their oil from other companies.
Mexico’s trying to do the opposite in order to become more efficient and profitable. That is, if the populist opposition parties and the PEMEX union don’t stop it. And it’s not even a case of privatization as much as allowing private investment.
In Soviet Russia…
Here’s an article from back in 1999 discussing the merger of Exxon and Mobil. Obviously it’s not timely but I feel it sums the situation up:
Again, these are nine year old figures but the trends since then have reinforced the statements made then - the percentage of oil production owned by private corporations has continued to shrink. Exxon Mobil, which is the largest non-governmental oil company in the world, still controls about three percent of world oil production. It’s only ranked fourteen in world oil production.
That said, you are correct. Upstream oil production does still generate the majority of Exxon Mobil’s revenue. The majority of the oil they sell was not purchased from state woned corporations.
However, the point I was making remains true: seizing oil companies like the OP suggested would be almost pointless. If the American government took over Exxon and the other “supermajors” (ignoring for the moment that many of them are not American corporations) they would find that most of the world’s oil is still outside of their control.
The government could repeal the oil corporations’ charter on the basis that they are ripping off the public.
Except for the fact that net profits are lower than other industries. which would be the opposite of ripping people off.
No it doesn’t. The dollar is falling because of US monetary policy. It has nothing to do with commodity prices at all.
You have your “facts” confused. Net margins are lower than some other industries, however those industries are not capital-intensive and result in an apples-to-oranges comparison.
Unless you’re aware of some other company that pulled in more than $11,700,000,000 in profit in the first quarter?