79-09-A5

- Main Page \ Reagan Radio Commentaries \ 1979

<< Previous Broadcast

Next Broadcast >>

Oil Profits

Transcript I'm aware that there are hazards in saying a kind word about the oil industry; aware that the major oil companies are seen by many as all powerful institutions responsible for smog, inflation, congestion, urban sprawl, chillblains and dizziness. In spite of this I don't feel they deserve the abuse they've been getting from political demagogues. One thing is certain we stand a lot better chance of getting the oil and gas we need from them than we do from our $12 billion Energy Department whose 19,000 employees deal in paper not petroleum. England's great statesman Disraeli once said "there are lies, blankety blank lies and then there are statistics." So it is with our energy crisis. Recently the White House gave the populist media ammunition for it's assault weapons when it cited accusingly, Texaco for having had an 81 percent jump in profits for the first quarter of 1979. Now that was not a lie -- it was a statistic. There is no question but that those facing long lines at the gas station saw this as evidence a rip off. An 81 percent increase in profits brings an image to mind of almost doubled prices leaving our pockets and ending up in Texaco's money bag. Well let's use some additional statistics to put things in focus which the White House could have done but which it neglected doing. The 81 percent increase for the first quarter of this year was the increase over the rate of profit for the final quarter of last year which was 2.4 percent. That means Texaco got 2.4 cents out of each dollar of sales last year and with the increase was getting in the first quarter of this year 3.7 cents which translates out to 1.6 cents for each gallon of gasoline. If they didn't take any profit at all there wouldn't be much of a drop in the price of gasoline. Translating even further the meaning of these statistics, we find the dividends to stockholders were a little under 6 cents for each dollar invested. U.S. Treasury notes are paying almost a dime, 9.6 cents on each dollar. Over the last five years total oil industry profits came to $61 billion and that's a lot of money . So is the $130 billion the industry paid to federal and state governments in taxes. And we aren't talking peanuts when we add that the oil industry spent about $126 billion in exploration and development. Actually oil industry profits as a whole run pretty close to the average of all industry in America and considerably less than some of the top businesses such as I.B.M. The Department of Energy estimates that 30 to 35 billion dollars a year must be invested in exploration and development by the oil industry just to keep us even with the amount of oil we are producing now. It would be nice if we could invest more and produce more because we've sent $165 billion to foreign producers over the last five years. This is Ronald Reagan. Thanks for listening.		Details Batch Number 79-09-A5 Production Date 06/29/1979 Book/Page Online PDF Audio Youtube? No
		Added Notes