Category: Business

Ask any student unschooled in
economics what the primary objective of business is, and he will
invariably answer, “to make money.” Wrong. Making money is easy. Earning
a profit by taking in more than you spend – the correct answer – is the
hard part.

Despite the misguided “Occupy” mentality that profits
are nothing more than gluttonous greed, the truth is quite different.
They are necessary to expand operations, hire more personnel, pay
salaries and benefits, and contribute to the overall health of a company
– and the entire economy. (Not that Wall Street greed doesn’t exist in
numerous other forms, much of which should be regulated/outlawed, but
that is another column).

Sunoco and ConocoPhillips are not in the
“business” of losing money, and their past profits and payouts to
shareholders are completely irrelevant to the fact that the outlook for
the refining business is bleak. They are under no moral, ethical or
financial obligation to keep the doors open. Keeping people employed
inefficiently – READ: subsidized – in a business with no possibility of
profit is anathema to the Free Market and would eventually collapse the
entire entity. This is not speculation but economic certainty.

And
if you want to see what happens when this course is recklessly pursued,
pull up a chair because you’re in luck. You have a ringside seat
watching such an implosion in action: the unsustainable economic
policies of the United States Government.

It is also important to
note that in 2009, Sunoco announced a significant worker layoff in an
attempt to improve company competitiveness –  and all were white collar,
with no unionized personnel getting pink slips. Closing the refineries
is anything but anti-labor.

Unions

The
refinery shutdowns have nothing to do with “greedy unions sucking too
much money” from the companies’ bottom lines, as some critics of
organized labor incorrectly state. Many of those in refinery operations
are highly skilled union workers who have made a solid living over the
last several decades. But a look at the market conditions shows such a
minefield ahead for the companies that no amount of concessions would
come close to solving the problem. In the big picture, the significant
obstacles facing Sunoco and ConocoPhillips are infinitely greater than
any “high” labor costs associated with operating the refineries.

Just
like “evil empire” rich oil company executives make inviting targets
for blame, so do “pillaging” unions who “want more for doing less.” Is
either side perfect? Of course not, since there is no such thing. But
while both make good scapegoats, it is simply counterproductive to
continually throw darts at them. Insults don’t solve problems. Strategic
vision and genuine partnerships do. The only thing that matters is
solving the problem – and quickly.

Obama

Some
find it convenient to blame the President for everything from high gas
prices to their children getting a bad test grade. While he certainly
has his faults, he extended his hand to the Republicans on the single
most important issue of our time – moving America towards energy
independence. If some of his suggestions had been enacted (which, in
reality, are part of the Republican platform), they would have quite
possibly made the refining outlook much brighter for Sunoco and Conoco,
and the shutdowns may not have occurred.

And the GOP response? No bills were
introduced, and they absolutely refused to work with the President,
with many stating that “he didn’t really believe what he was saying.”
What a brilliant, mature response.

For the disbelievers who need
proof, just watch the President’s 2010 State of the Union speech, when,
in front of the entire nation, he urged Congress to expand our offshore
drilling ventures, and freed up millions of acres of coastal water for
exploration and development. In addition, he called for an increase in
nuclear power plants across America and pursued loan guarantees for new
facilities (even one year later in light of the Japanese disaster).

Which
was interesting, not only because he went against one of his strongest
constituencies (the environmental lobby), but also because Obama’s move
threw a wrench in the conspiracy that he was a closet Muslim who wanted
to weaken America. Pushing for energy independence would be the polar
opposite way to achieve that goal.

Granted, Obama has not been
stellar in following up on his domestic drilling initiatives after the
BP spill, and has yet to authorize the critical Keystone XL Pipeline
project, but those shortcomings pale in comparison to the other Party’s
inaction.

What did oilman George W. Bush or his Halliburton-affiliated sidekick Dick Cheney do to increase domestic production? Zero.

Or
the patriarch of the Bush family, George Herbert Walker Bush? Well, it
was the elder Bush who signed the moratorium on offshore drilling. His
son W. left it in place for seven years, despite having sizable
majorities in both Houses of Congress. Only after fuel costs skyrocketed
to over $4.50 per gallon in 2008 did he call for the lifting of the
moratorium. But it was too little, too late. And it never happened.

What
could have prevented those crippling spikes at the pump? Offshore
drilling – both off the continental shelves and in ANWR (the Arctic
National Wildlife Refuge) – and the construction of new refineries,
given that the last one was built in 1976.

And what better time
to have pushed it through than right after the Sept. 11 attacks. In
addition to having a Republican congress and nearly 100 percent of the
nation behind him, Bush had the world’s goodwill in his corner.

Instead,
this nation’s reliance on foreign oil — which is a nice way of saying
we are pumping billions of petro dollars into the coffers of some who
are hell bent on destroying us — has only increased.

And this week, gas hit another all-time high for this time of year.