By Tom Doggett at Reuters
WASHINGTON (Reuters) – Congressional Democrats on Thursday urged big oil companies to invest more of their record profits into boosting U.S. oil production and developing renewable energy instead of buying back their own stock.
Exxon Mobil, which reported on Thursday the biggest quarterly corporate profit in history at $11.7 billion (5.9 billion pounds), has bought back $16 billion of its stock in the first half of 2008. Other oil companies have also spent billions of dollars buying their stock, earning the ire of the public and many members of Congress.
“We are writing to express our concern that you have used much of your record profits in recent years to buy back your own stock to enrich the value of your share price, rather than invest in oil exploration or production here in the U.S. or in the research and development of alternative energy sources that are demanded by U.S. consumers,” the lawmakers said in a letter to the heads of the five biggest public oil companies.
The lawmakers, who wrote to Exxon Mobil, BP, Royal Dutch Shell, Chevron and ConocoPhilips, criticized the companies for spending $194 billion on stock repurchases from 2004 through the first quarter of this year.
They pointed out that $194 billion was enough to give $2,000 rebates to every American family, make 5 million plug-in hybrid cars and build 3.5 million solar-powered homes.
Based on company filings, the lawmakers said only 5 percent of the total money the firms spent on re-buying their stock was spent on research and development, which may not even have focused on alternatives, while 30 percent of the stock buyback amount was spent on U.S. oil exploration and production.
“Given today’s strong market incentive for expanding exploration and production, we can only believe that reinvesting your vast profits into the production of more oil and natural gas in the United States is a profitable strategy that will help our country increase its dependence on foreign oil,” the lawmakers said.
A separate analysis from the Centre for American Progress said the $47 billion in just U.S. profits the five big oil companies earned in the last year was equal to $236 from every person with a drivers license in America.
“Inside the boardrooms at the major oil companies, it’s Christmas in July,” said Sen. Charles Schumer of New York, one of the lawmakers who signed the letter to the oil company executives.
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