PR Blitz Aside, Big Oil Drilled Consumers for Stockholders

As demand drops, companies shelve plans to explore—among moves that benefit shareholders, not consumers
By Clay Dillow,  Newser Staff
Posted Oct 28, 2008 12:43 PM CDT
When oil prices were high but fuel demand falling in July, refiners cut back on production. This meant supply was low when hurricanes hit later in the summer, which caused gas prices to skyrocket.   (Getty Images)
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(Newser) – Despite public-relations campaigns designed to make consumers think otherwise, big oil companies remain firmly tied to doing what’s best for their stockholders and bottom line, the Los Angeles Times reports. Though demand has outstripped production, companies spend more on stock buybacks than supply-boosting exploration. But, one analyst notes, “it's not their job to be doing things in the public's best interest.”

Cases in point: When demand fell in July, refiners scaled back, causing shortages and spiking prices when hurricanes knocked out production on the Gulf Coast, and while truckers struggle to stay afloat, refiners are exporting diesel to Europe, where it fetches higher prices. Though Congress has relaxed restrictions on offshore drilling, it will be profits that determine when companies move to tap oil there.