Called "Hot Profits and Global Warming: How Oil Companies Hurt Consumers and the Environment," the report says high gas prices do not dampen demand because "most families have little leeway to alter their driving habits." With their massive profits, the oil companies are buying back stock and paying dividends rather than invest in infrastructure or alternative energy sources, according to the report. A news release from Public Citizen notes that Congress has summoned BP to the hill today to explain why the company allowed its Alaska pipeline to deteriorate despite such huge profits. BP says it will invest $800 million in solar, wind and other alternative sources, but Pubic Citizen notes that is less than 2 percent of the total profits, stock buybacks, dividend payments and cash reserves ini 2005.
"With $1 trillion in assets tied up in extracting, refining and marketing oil, their [the oil companies'] business model will squeeze the last cent of profit out of that spent capital for as long as possible," said Tyson Slocum, who is the director of Public Citizen's energy program and the report's author.
The Public Citizen report was also critical of the oil company mergers that have reduced competition, noting that the 10 largest companies control 81.4% of the market. The news release points out that federal investigations indicate that U.S. energy markets are susceptible to market manipulation.
Public Citizen's plan to reform the energy markets calls for a windfall profits tax, repealing existing tax breaks for oil companies, re-regulating energy trading policies and beefing up anti-trust laws.
[Source: Public Citizen]