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Ben Stein How Not to Ruin Your Life

Ben Stein, How Not to Ruin Your Life

Big Oil, Little Gratitude

by Ben Stein

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Very Good (1198 Ratings)
3.888992/5
Posted on Friday, September 28, 2007, 12:00AM

My dear readers, I've given you such good advice over the last few years about buying EEM and EFA; riding out the panics of the CNBC crowd; going forward with systematic accumulation of broad-based ETFs, mutual funds, and variable annuities; and getting your money offshore to take advantage of the falling dollar.

So I think I'll give you a break and write about something else for a week.

Pure Chemistry

Imagine there was a chemical compound so valuable, so useful, and so indispensable that the whole present and future of the industrial world depended upon its plentiful supply. Suppose that chemical meant the difference between life and death, peace and war, and freedom and slavery for the whole developed world.

Suppose there were a small number of companies that took great pains to find this chemical, extract it from underground in deep jungles, miles below the ocean floors, in cruelly hot deserts, and in swampy marshes. Suppose that these companies sent brave men and women into these inhospitable spots to face the elements -- as well as terrorists, kidnapping gangsters, and extorting governments.

Then suppose these companies brought the chemical home to North America, and had to face endless, bitter fights from well-funded opponents of this chemical -- some good-intentioned, but some purely troublemakers. These opponents fought to the bitter end any attempt to turn the raw material of this chemical into a refined product that would power cars, trucks, fire engines, ambulances, hospitals, schools, factories, nursing homes, and the military weapons that guard us and fight our wars.

The Truth Hurts

Now further suppose that the companies that bring us this chemical and its refined products, like heating fuel and gasoline, made profits that were, on a percentage-of-sales basis or a percentage-of-equity basis, far smaller than the profits in banking or Internet software.

Finally, imagine that political people and intellectuals wanted to put every kind of control and restraint on these companies and tax them to within an inch of their survival. And that the owners of these companies were not billionaires, but that the pension funds of firefighters and police officers and nurses and teachers and widows and orphans relied on the dividends of these companies to survive.

You don't need to suppose any of this, of course, because it's the reality of America's oil companies and how they're treated.

Don't Be a Hater

Yes, America's oil companies, besieged by foreign dictators, attacked endlessly in the media, mocked and belittled in the academic world, are vital to the survival of this country. Just try to imagine America without oil -- we'd be embroiled in "Mad Max"-style chaos within a week. We would be living in complete anarchy.

Instead, we have a rich, advanced nation where the whole society and its progress float on liberally supplied, bargain-priced petroleum. And, like surly teenagers who hate their parents because they're totally dependent on them, we respond by hating the oil companies.

This is a sure way to commit national suicide. The oil companies aren't run by rich conspirators out of some Oliver Stone movie. They're not monopolists illegally fixing prices the way Rockefeller did more than a century ago. They're owned by people like us, employing people like us, saving the rear ends of people like us.

Lighting the Genie's Lamp

If they're making a legal product that we can't live without in a legal way and selling it at a legal price, let's lay the heck off of them and let them do their jobs. If you think the oil companies make too much money for their stockholders, then buy their stock for your retirement.

If burning their oil causes pollution, well, so do cattle. If burning their oil heats the planet's atmosphere, then let's work with them to make cars and trucks that burn less oil. (And let's not forget our dear pals in China, who are offsetting all of our "green" efforts a million times over with their ruthless murder of the planet in the form of massive, unchecked pollution of the air and water.)

There will be a substitute for oil in a few generations anyway, or maybe we'll be living a totally different kind of life. (I won't be living at all.) But for now, oil is what lights up the genie's lamp. Let's show some respect for the companies that bring it our way. After all, it makes no sense to kill the goose that lays the (black) golden eggs.

Ben Stein has no financial interest in the products mentioned in this column.

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296 Comments

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  • Charles - Tuesday, October 23, 2007, 5:51PM ET  Report Abuse

    • Overall: 1/5

    Sorry, Mr. Stein, gotta disagree with you here. Big Oil is seeing record profits and you want me to believe that they're still hurting, that they're "within an inch of their life"? I have no interest in further empowering this industry that will say or do anything to get what it wants, and that has politicians cowering in its presence. Folks, Mr. Stein used to be a speechwriter for Richard Nixon and is a dyed-in-the-wool conservative. While I think he's a fabulous game show host, a wit, and a very intelligent man, you gotta consider the source when he talks up the oil industry. I don't have any oil in my portfolio, thankfully. Why should I support an industry that's out of touch with the average American consumer?

  • Yahoo! Finance User - Friday, October 19, 2007, 7:49PM ET  Report Abuse

    • Overall: 1/5

    Lost his mind. Oil companies are indeed run by billionaire tycoons. And one must wonder how gas prices remained high when oil prices were low. Finally, there is indeed an oil cartel to which the oil bigwigs cow-tow. Yes, that makes it all a conspiracy. And every drop we use burns the earth. Get a brain, Ben!

  • Doc - Thursday, October 18, 2007, 3:08PM ET  Report Abuse

    • Overall: 5/5

    Bring on the responses of the proudly ignorant!

  • jadethief - Monday, October 15, 2007, 11:37PM ET  Report Abuse

    • Overall: 1/5

    One only needs to read "the Prize" to see how far off Ben is on this issue. Show us your portfolio, Mr. Stein...

  • El Viejo - Monday, October 15, 2007, 11:48AM ET  Report Abuse

    • Overall: 1/5

    man, what was it last week ? ... bend over for the big oil companies, the Fed for crying out loud, even Rhonda got into it ! ... glad that week was over !!!

  • Dean - Sunday, October 14, 2007, 11:57PM ET  Report Abuse

    • Overall: 5/5

    Excellent article that should be read by an even wider audience.

  • Love2Fly - Saturday, October 13, 2007, 3:42PM ET  Report Abuse

    • Overall: 1/5

    I see the graph in the comment posted on the 13th 1:09pm did not post well, but the numbers do show an amazing raise in Revenue for ExxonMobile in 2004 and 2005. If I recall correctly, isn't this the time period prices went up at the gas station??!!. What is the Title for this Article? "Big Oil, Little Gratitude" I think my paying nearly $3.00/gal and giving them this increase Revenue is more than enough gratitude, so YOUR WELCOME, Oil Companies!!

  • Yahoo! Finance User - Saturday, October 13, 2007, 1:09PM ET  Report Abuse

    • Overall: 3/5

    It sounds like Ben has stocks in the Oil Industry. I never care how well any Company is doing (I don't play the Market), but this article made me look into the Revenue and Net Income for different Oil Companies. I quickly graphed ExxonMobile numbers in Excel and man!! what an upraise in slope between 2003 and 2005 in the Revenue. Net Income stayed a lot flatter, I wonder what happened with the money that comes out from Revenue minus Net Income between 2003 and 2005; R&D perhaps!! The numbers I graphed are as follow: (Year/Revenue/Net Income(Money in Billons)) 1998/169/8.8, 1999/187/8.4, 2002/179/11.2, 2003/213/21.7, 2004/298/25.3, 2005/371/24.3. I rated this article as good because it made look a little into the finance of Oil Companies. I'll try to put a simple graph here but I don't know how it will post. Just connect the o's (Revenue) and x's (Net Income): o o o o o o -------------------------- Time x x x x x x

  • David - Friday, October 12, 2007, 2:12AM ET  Report Abuse

    • Overall: 5/5

    For the conspiracy theorists that seem to abound in the negative comments. Do you really think if a car could run on nitrogen or water or cow dung that it wouldn't be in the best interest of our failing automotive companines to adopt it? Or maybe big oil owns big auto too? Go back to watching your Star Trek re-runs you loonies.

  • Idiot - Monday, October 8, 2007, 4:36PM ET  Report Abuse

    • Overall: 1/5

    Stein, your act is growing old and tiresome. Your formidable vocabulary no doubt includes "collusion" and "oligopoly". I'm sure it contains "disingenuous" as well. Whose pocket are you in anyway?

  • David - Sunday, October 7, 2007, 5:57PM ET  Report Abuse

    • Overall: 5/5

    An application of simple economics would demonstrate that we need these companies we demonize to be healthy. Great article! I think the column on variable annuities is terribly irresponsible, however. Do not ever get into one of these or recommend them to your loved ones! They will ravage your retirement.

  • yattaboy - Sunday, October 7, 2007, 12:33AM ET  Report Abuse

    • Overall: 5/5

    My, are we ever hostile today. I'm not exactly in love with Chevron Texaco, Exxon, BP, etc. but read the article! It's just explaining what oil 'is'. If you want to tangent to collusion, government/corporate partnerships, etc. go ahead, but you're still focusing on the "small picture". Oil is an inelastic commodity, and has been so with Republican and Democratic Presidents in the US, communist el Presidentes in Cuba and Venezuela, and dictators in Iraq and Burma (ahem, Myarmar). If you really want to blame anyone, look at traders (like many of us who write these comments) who try to predict the future value of oil, building in risk premiums for war, hurricanes, terrorism, kidnappings, etc. Blame the fact that, collectively, the 6.5 billion people on Earth are still using more oil each year than the last. Bingo...the price goes up. I know it's fun to hate, but if you must, at least focus your hate on a logical target.

  • Yahoo! Finance User - Friday, October 5, 2007, 11:32PM ET  Report Abuse

    • Overall: 1/5

    I already am paying $10000 a year so the oil companies can kill people in Iraq for oil (in theory). We do so much to subsidize the oil industry that they are the ones that owe us the THANKS.

  • Yahoo! Finance User - Friday, October 5, 2007, 1:03PM ET  Report Abuse

    • Overall: 2/5

    Don't forget about the Exxon Valdez's disasterous oil spill & how Exxon has constantly resisted cleaning it up.

  • Yahoo! Finance User - Thursday, October 4, 2007, 8:40PM ET  Report Abuse

    • Overall: 5/5

    "Don't Be a Hater" Well said! The uncivil leftists are VERY angry people and need something/someone to hate. Oil companies, who produce the gas that helps us with our livelihoods, are the targets du jor. What will the left hate next?

  • Yahoo! Finance User - Thursday, October 4, 2007, 4:25PM ET  Report Abuse

    • Overall: 5/5

    It always comes down to this doesn't it? The rational review of the situation (Stein) and the passionate response (pick any churlish comment in this list). When the oil substitute arrives it will be great - the problem being is that we will not notice it as it slowly infiltrates our lifestyles. Think hybrid cars now- a little here and there, more and more later. Great. When they dominate, the passion will be directed against the battery makers and copper miners. When people who speak out against the situation passionately can do so without hypocrisy, the rest of the country will take notice. Unfortunately it's hard to march on Washington without driving or flying there. Shouting 'No blood for oil!' hurts your cause because everyone knows you must get back on the bus to go home.

  • Hello - Thursday, October 4, 2007, 2:51AM ET  Report Abuse

    • Overall: 5/5

    I really don't have an issue with the oil companies. It is the fear and greed traders of oil and gas futures at NYMEX who are really to blame for the pain at the pump.

  • Yahoo! Finance User - Wednesday, October 3, 2007, 7:14PM ET  Report Abuse

    • Overall: 1/5

    How pathetic!!! Don't worry about our use of oil, just thank the companies. No worries, in a few generations, they'll figure out our mistakes. Ben Stein, you are quite a sellout to the oil and variable annuity industry. Your advise is worthless.

  • Yahoo! Finance User - Wednesday, October 3, 2007, 5:48PM ET  Report Abuse

    • Overall: 1/5

    Oh! Those poor oil companies! After reading this article, I was in tears! I feel SOOOO horrible! Those sad, poor, CEO's of Exxon-sniff-I just feel so bad! Next time I go to the gas station, I will tell the attendant that I will pay him $10 a gallon for gas. No, really, please, I insist. I mean it. Those poor oil companies are so sad and lonely, the least I could do is use all my rent money and support Chevron instead. If only I knew! Oh! The agony they must be going through!

  • Yahoo! Finance User - Wednesday, October 3, 2007, 4:26PM ET  Report Abuse

    • Overall: 5/5

    The "Majority" of Americans have no idea the cost & gamble involved in Energy Exploration & Production. I have been in it for 45 years. God help us if the liberal side of the Democratic Party control the House, Senate & Whitehouse. If they tax oil companies, the oil companies will just pass it down to consumers to keep their sef in business. It will be the same thing that happens when they raise the minimum wage. You would think the majority of people would understand this, but I heard the other day that the most watched & attended sport (if you want to call it a sport) was RAW (wrestling, TV & LIVE). If these people believe this is real they will also believe everything the liberal democrarts will tell them. I believe America will be headed in the wrong direction if we don't come to our senses & live by the original constitution & protect our borders. God saver us from Communism & Terrorism !

  • P - Wednesday, October 3, 2007, 2:48PM ET  Report Abuse

    • Overall: 5/5

    I find it rather amazing that people can choose to be so ignorant of reality. They also often allow the story to supercede the truth. Oil, like gold, water, milk, corn etc. is a commodity traded locally and/or globally. Simple economics teach us that if demand is higher than the supply, the price will go up. As it is, supply is limited. Is it by choice or by manipulation? I believe the true answer to be both. However I would say that manipulation comes in the form that is no different from farmers growing corn (Who I'll remind you get government subsidies). If the farmer determine that the risk is too high to acheive economic success they will choose to not plant that extra 40 acres this year. Is that deliberate and hurtful manipulation? Conspiracy? From my perspective if you say no then how can you say the oil companies deliberately conspire and fix prices illegally? If we look at average profit over the last ten years, what industries have made the highest? Try Banking and Finance, Computers, Real Estate. Is Big Oil generating an unfair profit? No!!! They rank in the middle of the list in profitability. Many members of Congress believe the recent record profits put up by oil companies over the last two years are unfair and need additional taxation. If they also choose to tax the other industries that have similar or higher profit margins then I can accept the additional taxation. However, if the oil industry is singled out to receive this taxtion I believe it to be unfair. Alternative energy is not viable in the short term. If in the future it becomes cost effective we will see the price of oil decline and a new equilibrium will be reached.

  • Yahoo! Finance User - Wednesday, October 3, 2007, 10:51AM ET  Report Abuse

    • Overall: 5/5

    Great article! And as for those who rant against business in terms that remind me of children who need a nap, one can only laugh and say of them: "Who needs facts when you have emotions?"

  • Yahoo! Finance User - Wednesday, October 3, 2007, 5:53AM ET  Report Abuse

    • Overall: 5/5

    mdmdmd999, Your little rant is perhaps the most ignorant, pitiful piece of work I've seen on-line in many months. This is what you've come down to -- "...we are already the biggest beggars, looters, killers, suckers, debtors, polluters of the planet." You have deep psycho-self-loathing issues that need treatment. Get help, or just end it all. Jeesh!

  • Thomas B - Wednesday, October 3, 2007, 1:19AM ET  Report Abuse

    • Overall: 1/5

    blaming the general(ignorant) public does little to present truth !!

  • Yahoo! Finance User - Wednesday, October 3, 2007, 1:14AM ET  Report Abuse

    • Overall: 2/5

    To those who think otherwise about oil, why dont you join the Amish community? Its hypocritical to condemn a thing and live on it at the same time. Sure nothing is perfect, or we would be in utopia. But this is real world; instead of ranting, do you have a better idea to replace oil that we can use right away on a worlwide scale? If you have, at least try to convert your immediate neighborhood to fully depend on it solely, and the whole world will kiss your feet in no time. Until then, you're just one of the countless hypocrites heating up the planet with a generous serving of noise pollution.

  • Yahoo! Finance User - Tuesday, October 2, 2007, 11:56PM ET  Report Abuse

    • Overall: 5/5

    Well said Ben. I am disheartened by the many ignorant and anti-capitalist comments made by the various responders. Our country is a capitalist society, or at least that has been the intention of our predecessors, so why do so many people bad mouth free enterprise?

  • miked - Tuesday, October 2, 2007, 11:51PM ET  Report Abuse

    • Overall: 1/5

    This is again an example of how shortsighted,hurried,nonsensical we are,very sad that Yahoo allows such stupid so called experts to write such articles.After sucking on the planet's reserves(oil) infinitely more than any civilization ever,after killing and displacing millions in the process,after continued erroneous,misdirected,misguided,misconc-eived policies for years it is now that this moron is trying to teach the intelligentia to keep sucking and thanking the biggies that without the politics played by our government and our oil componies working together we would be on the begarly streets.The fact of the matter is we(our policies) are the reason why we are already the biggest beggars,looters,killers,suckers,debtors,polluters of the planet.It is becuase of misconceived people like ben and our govt.we are percapita the infinitely more addicted,over-consuming people eating more pigs,sucking more oil,using more energy,electricity,creating more carbon emmissions and pollution and the very reason for the so called climate change if you are in Gore's school.Even if China continues to expand it's industrious growth for a thousand more years it will not be at the same culprit we have been over the last 100 years.So just shut up and enlighten people to save,sacrifice,think,work,educate and appraise them to be more responsible for everything especially moving away from our Oil-addiction and start looking,thinking more deeply within our brains,soul and conscience and not the usual american political way as probably you know by now hopefully the value of your dollar,house,credit and future of america.

  • Chris - Tuesday, October 2, 2007, 11:34PM ET  Report Abuse

    • Overall: 4/5

    What a bunch of ignoramuses who think Ben's article is a bunch of naive propaganda. If you think that there are great alternative energy sources out there that have been quashed by big oil, then why hasn't someone started a company to develop these alternatives and make millions? All because of the political clout of big oil? You would believe any conspiracy the left wing crazies would tell you. What silly nonsense. After you vote for Hillary, I have some beach front property in Arizona I would like to sell you.

  • Yahoo! Finance User - Tuesday, October 2, 2007, 10:14PM ET  Report Abuse

    • Overall: 4/5

    It seems that the rating depend on weather you agree with Ben or not, and not weather the article was well written. I don't really care for oil companies, but he makes good points. Once oil becomes expensive enough it will be replaced. Until then the world will run on oil.

  • Yahoo! Finance User - Tuesday, October 2, 2007, 9:58PM ET  Report Abuse

    • Overall: 1/5

    What a fool. If any renewable energy was supported politically via a powerful lobby, defended internationally, subsidized by the government to a large degree, and/or gotten a free ride on pollution as Big Oil has over the years, it too would be "competitive". Wake up. Oil dominates the market because political powers have decided its fate for us. I love how he whines at China's lack of control. Is this an excuse for our apathy? Apparently it is, according to Ben. Oil companies say they invest in renewables, but think it through - what incentive do they have to kill the golden goose, to borrow an analogy? Take 1% of oil profits and invest it in renewables in an Apollo type project. Offer incentives and prizes to spur innovation. We'll be tripping over ourselves in options in 5 years. Poor oil companies! "So do cattle"? Great argument.

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