Matthew P. Maljevec – 4/4/07

This page was last updated on April 7, 2008.

Take over the oil companies; Matthew P. Maljevec; Beaver County Times; April 4, 2008.

Since September 2005, Mr. Maljevec treated us with three letters (here, here, and here) with “Impeach Bush” in their titles, merely bashed President Bush in a fourth letter, in a fifth letter Mr. Maljevec asserted, “Rendell is one of the best governors Pennsylvania has ever had,” in a sixth referred to Lynn Swann as a “wannabe” and to President Bush as “loser Bush,” and in a seventh sang the praises of Jimmy Carter while expressing displeasure that more politician children weren’t serving in Iraq, and I assume Afghanistan though Mr. Maljevec didn’t mention it. Mr. Maljevec bashed Rudy Giuliani in the last letter of his I critiqued.

This letter is similar in quality to Mr. Maljevec’s previous letters.

Below is a detailed critique of the subject letter.

“I have been hearing and reading a lot about the unprecedented increases in the price of gasoline and other fuels.

“This is nothing but the blatant greed of our oil industry, and it must stop now. The greedy Grinches who sit on the boards of directors in these oil conglomerates that make trillions of dollars profit per quarter must be stopped. They do not want to build more refineries because in this manner they can control the price of oil.”

[RWC] “[T]rillions of dollars profit per quarter?” As a shareholder, I wish! Where does Mr. Maljevec get his info? The 2007 4^th quarter net income after taxes for ExxonMobil was $11.7 billion. That’s about 1.2% of $1 trillion, meaning about 83 other oil companies would have to have had quarterly profits equal to ExxonMobil’s just to reach the first trillion of Mr. Maljevec’s “trillions of dollars profit per quarter” BS.

Mr. Maljevec failed to note mention the taxes ExxonMobil paid. Income taxes alone were $8.1 billion, with total taxes (excluding sales) of $20.1 billion!

The idea oil companies “do not want to build more refineries because in this manner they can control the price of oil” is more nonsense. While it’s true no new refineries have been built since the 1970s, that’s a function of regulations and “not in my backyard” policies. The same is true for significant upgrade of existing refineries. If for some reason an oil company wanted to build a refinery anywhere near Beaver, I’d be willing to bet Mr. Maljevec would be among the people protesting. As a country, U.S. refining is the most efficient in the world and can process the crappiest (technical jargon) crude on the planet. That’s why Hugo Chavez’s occasional threat to cut off Venezuela crude to the U.S. is BS. Much of what Venezuela produces is of poor quality (high sulfur content and low API gravity) and few refineries in the world can process it.

Finally, let’s not ignore the potential impact of government policies on refining capacity. First, if we can’t drill for more oil in the U.S. or even offshore, what’s the point of increasing refining capacity? Second, what’s the point if our goal is to reduce oil consumption? The huge fixed costs of refineries make them too expensive to run at partial capacity. Third, with politicians always running around talking about “windfall” profit taxes, who would invest the billions of dollars it would take to build a new refinery?

“I am not an advocate of government takeover, but in this situation there is but one way to protect us from being gouged by these greedy, money hungry idiots in the oil industry — government control.”

[RWC] Given Mr. Maljevec’s letter history, he should be careful about calling people “idiots.” Mr. Maljevec does realize governments outside the U.S. set the price of crude oil, not the oil companies, right?

“How many readers remember the takeover of our railroads during World War II? I remember it well, and it worked. During this period, the workers kept on striking for want of more pay while many of our men and women were fighting to protect us.”

[RWC] If Mr. Maljevec “remember[s] it well,” I believe his memory is similar to Hillary Clinton’s Tuzla and John Kerry’s Cambodia memories. While the feds took over the railroads during World War I, it didn’t do so during World War II. Further, the reason for the takeover had nothing to do with railroad employees “striking for want of more pay.” The perceived problem was that at the time, the railroads were unable to coordinate their activities and the fear was this would hinder the war effort.

“The same is happening now — only we have this greed for more money and to hell with the general public.

“This must stop now or this will cause our country to come to a sudden stop. A lot of fixed- and low-income individuals are suffering because of this. Let your representatives know how you feel — unless you like to pay these prices.”

[RWC] When did government ever do anything constructive to reduce the cost/price of anything? Note Mr. Maljevec’s reaction. It was to constrain business. Mr. Maljevec made no mention of the government blunders contributing to the problem.

On average, local, state, and federal taxes take over 33 cents of every dollar we earn, and Mr. Maljevec believes government is the solution for high fuel prices?

“And you haven’t seen anything yet. Four to five dollars a gallon is around the corner. Think about it.”

[RWC] What does Mr. Maljevec believe would happen if the government took over the oil companies? Does he really believe this would have a positive effect on prices? In case Mr. Maljevec missed it, countries hostile to the West control the vast majority of oil in the world.