LA Times’ Risible Attack On Oil Profits

Authored by John Seiler via The Epoch Times,

One of the great reasons to read The Epoch Times is to counter the nonsense on California perpetrated every day by the Los Angeles Times, which is still highly influential in state politics. A case in point is a recent editorial that opines, “Big Oil reaps record profits while the planet burns. California should curb its greed.”

In one headline it advances: socialism instead of “record profits”; “the planet burns,” meaning “climate change,” the recent bugaboo that replaced “global warming”; and the idea that giving people a commodity essential to civilization is “greed.”

It begins: “Chevron, Shell, Exxon Mobil and other oil companies made more money than ever in 2022, showing just how massive a windfall they reaped as surging gas prices made it a struggle for drivers to afford filling up.” Actually, the cause is not a “surge in gas prices,” but a surge in global oil prices.

A view of the Chevron refinery in Richmond, Calif., on Nov. 17, 2021. (Justin Sullivan/Getty Images)

And the L.A. Times doesn’t mention how the oil companies just three years ago suffered record losses, as the price of oil actually went negative at the beginning of the COVID-19 lockdowns. Here’s the New York Times from April 20, 2020:

Something bizarre happened in the oil markets on Monday: Prices fell so much that some traders paid buyers to take oil off their hands.

The price of the main U.S. oil benchmark fell more than $50 a barrel to end the day about $30 below zero, the first time oil prices have ever turned negative.

Fortunately, that didn’t last or we’d all be starving and freezing to death. The global oil market largely is a capitalist operation, despite all the meddling, especially by governments in Russia and communist China. But a massive loss in one period means investment in new oil drilling and refining dropped for a while. That will be compensated for with new investments from the profits of 2023.

The L.A. Times:

The billions in record profits they posted this week bolster the appeal of California Gov. Gavin Newsom’s effort to curb oil industry price gouging. Under a proposal he released late last year, the state would set a cap on oil refinery profit margins, penalizing excess profits and returning a percentage of it to consumers.

Such measures could rein in oil industry greed and save Californians money. … “Big Oil has been screwing you,” the governor said in a video message last week.

I reported on that earlier in The Epoch Times in “Newsom Grandstands on Oil Profits.” Instead of supposedly helping consumers, any new tax will be passed on to them. I also pointed out that the added hassles will reduce incentives for the oil companies to invest in California’s rickety old refineries, which break down now and then, causing shortages and higher prices. So we’ll get more breakdowns, bringing more shortages and yet higher prices.

The L.A. Times:

Last year’s spikes hit Californians especially hard, because they already pay the nation’s highest gas prices, and saw them jump even higher, reaching more than $8 a gallon at one Los Angeles gas station. They deserve real action to deter oil companies from squeezing out excessive profits from motorists at the gas pump.

Much further down in the overlong editorial they concede, “California’s gas prices reached new heights last year as the Russian invasion of Ukraine, among other factors, pushed prices to an average of $6.44 in June 2022, the highest on record in the state.”

Gas prices over $7.00 a gallon displayed at a Chevron gas station in Menlo Park, Calif., on May 25, 2022. (Justin Sullivan/Getty Images)

Well, if it’s the fault of the war, then why blame California’s refineries? California has no influence over the war, because foreign policy is handled by the president, the State Department, and Congress.

But the state does have control over its gas taxes, which are the second highest in the nation, at 53 cents per gallon, after only Pennsylvania’s 59 cents. In Alaska, it’s only 9 cents—and in Hawaii and Virginia, it’s 16 cents.

The L.A. Times laments the slow progress of legislation to hit the oil industry’s profits. And:

Oil companies are interested in protecting their bottom lines, spending millions last year trying to elect sympathetic state legislators and pushing a referendum to overturn a new California law that bans new drilling near homes and schools to protect people’s health.

Fancy that. Government attacks an industry, and that industry hires lobbyists to protect itself. The L.A. Times adds:

The proposal before lawmakers includes provisions to increase oversight and transparency by expanding state authority to collect data that could shed light on California’s mysteriously high gas prices, which regulators say there isn’t enough information to explain.

But there’s no mystery. The high prices result from the Ukraine War, the general inflation of the past two years from too much federal spending, and high California regulations and taxes. The L.A. Times:

Stricter oversight of oil refining will be increasingly important in the coming years as California’s climate policies, including a zero-emission vehicle mandate, shrink demand for petroleum.

Actually, what’s more likely to “shrink demand for petroleum” in California is more people leaving this badly governed state. Meanwhile, global demand for petroleum continues to grow. According to a Jan. 31 projection by the Statista Research Department, here are the numbers beginning with 2020, the COVID year, in millions of barrels per day:

• 2020: 91

• 2021: 96.5

• 2022: 99.4

• 2023: 101.2

• 2024: 102.3

• 2025: 103.2

• 2026: 104.1

The fact is the rest of the world doesn’t care what California does, but is preoccupied with its own problems. For developing countries, that means using fossil fuels, and the even older coal, to power new industrial production.

Military personnel stand in front of a High Mobility Artillery Rocket System (HIMARS) during the military exercise Namejs 2022 in Skede, Latvia, on Sept. 26, 2022. (Gints Ivuskans/AFP via Getty Images)

Moreover, here’s something I haven’t heard elsewhere. The Ukraine War largely is a petroleum war. All those tanks, trucks, and planes are not powered by electric engines, but by gas, diesel, and jet fuel. So are almost all ships, with the exception of nuclear-powered aircraft carriers and subs. Russia, China, India, Japan, and other major military powers are going to make sure they have enough of all those petrochemical fuels to keep their vehicles and ships going.

The L.A. Times should talk to the California National Guard about how well it could operate if it had to switch to electric-only vehicles to avoid helping “Big Oil” reap “record profits.”

Finally, my guess is Newsom will ignore the L.A. Times and find some way to wiggle out of a “windfall profits” tax on Big Oil. Or maybe he’ll just support the reporting aspect of the proposed legislation. He recently met with Democratic strategist David Axelrod, who later said, “He’s a very talented performer and he’s got a powerful story in many ways. But the authenticity thing is important. And it’s TBD as to whether he communicates that.”

Ouch. Attacking windfall profits is an inauthentic move, especially in the Midwest, which already suspiciously laughs at anything involving California, but holds crucial primaries any Democratic candidate must win. In his obvious presidential bid, which Axelrod mentioned, Newsom needs to move to the center and to reflect the needs and gripes of voters far removed from the hothouse of the Los Angeles Times editorial board.