Pumping Cash, Not Oil
Business Week (May 28 issue) documents how US big oil is ploughing the windfall gains from high prices into share buy backs rather than new production. Exxon MobilÂ – the world’s most profitable company – pumped out $49 Billion in operating cash flow last year, just 40% went into new capital expenditures, down from 50% in 2000. The other 60% went to company purchases of their own shares, further boosting returns to shareholders.Â Company production is actually flat. So much for the ECON 101 view that high prices are supposed to stimulate new investment and new supply, and – to my mind – more than sufficient justification for proposals for windfall taxes on Big Oil profits wending their way through the US Congress. How come we never even talk about these things here in Canada?