Mullings: An American Cyber-column By Rich Galen

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Windfall Profits

Rich Galen

Friday November 11, 2005

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But now it's just another show,
You leave 'em laughing when you go,
And if you care, don't let them know,
Don't give yourself away.

Ok. Thanks.

According to the Reuters news agency some 40 US Senators gave of their valuable time earlier this week and "fired questions at the top executives of ExxonMobil, Chevron, ConocoPhillips and the U.S. units of BP and Royal Dutch Shell."

I don't know much about the oil business, but I do know that it has cost as much as $75 to fill the Mullmobile over the past few months.

Regular readers know that the Mullmobile is a 1999 Landrover Discover which bags about 15 miles to the gallon. Its gas tank has a capacity of 25 gallons. Filling that baby requires a stop at the bank for a chat with my loan officer.

On the other hand I also have the Skippy Scooter - a 50cc two-cycle number which has a capacity of a little over one gallon and gets about 80 mpg.

My fleet average, therefore, is 42.5 miles per gallon. I am WAY in the green zone on this one.

Where was I? Oh, yes the oil companies upon which some Senators - notably the Pride of California, Barbara Boxer - want to impose a windfall profits tax.

Public companies do not, as a rule, tuck their money under the corporate mattress. They do things with it. One of the things they do is invest in whatever their business happens to be. Another thing they do is provide dividends to their stockholders.

Another idea which was floated as making the oil companies give some of their profits back. That got my attention.

As Ms. Boxer is so concerned about the unfairness of the oil companies making all that money, I decided to see who else might think oil company profits are a good idea.

Guess who I came up with? Exactly: The California Public Employees' Retirement System, affectionately known as Calpers.

Calpers is one of the largest investors in the entire world, controlling assets of about $190 Billion.

Some of their holdings are - Ta-Da! - oil companies including three of the US companies represented in the Senate hearing.

Calpers, according to its latest annual report, owns about 28 million shares of ExxonMobile; about 9 million shares (after a stock split) of Chevron; and some 5.6 million shares (also after a split) of ConocoPhillips.

The value of Calpers' holdings in those three companies has increased - since they closed the books at the end of their last fiscal year - by one billion dollars.

That would be, Senator Boxer, a one billion dollar WINDFALL for the 1.4 million public employees and retirees of the great State of California.

If the oil companies should give back some of their profits. Wouldn't it be fair to make their shareholders - whose holdings have increased dramatically in the run up of oil prices - to give their profits back, too?

I don't imagine Senator Boxer will be introducing legislation, any time soon, to make Calpers give back its windfall profits on oil prices. Do you?

New topic: A last word about the elections on Tuesday. The best the GOP can say about it is: "It wasn't as bad as it might have been." The Dems, upon the same sober reflection, can only say: "It wasn't as good as it should have been."

In Virginia, national Democrats were passing the word that they not only expected to win the Governor's race (which they did) but the other two statewide races: Lt. Governor and Attorney General (which they did not) and to take over control of the State House of Delegates.

On the last point they not only didn't take control, they ended up with a net change of just one seat leaving the GOP firmly in control in Richmond.

Across the nation, reform measures on ballots backed by the Left and the Right went down to defeat. Which leads me to believe the real message of this election was:

"We're tired and a little frightened. It would be better to let us catch our national breath and get the ship of state aimed on a steady course before we make any more major changes."

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On the Secret Decoder Ring page today: The full lyrics to the Judy Collins song, a link to the Reuters piece, a Mullfoto of the season and a Catchy Caption of the day.

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