TMR has obtained a sneak peek at a letter signed by the CEO's of Chevron, American Electric, Dow Chemical and FedEx that will run tomorrow as a full page ad in the Wall Street Journal, New York Times and the Washington Post.
The Unshaken PillarWhile key pillars of our economy — housing, banking, autos — have been shaken, one pillar stands unshaken and provides the stability that our economy so desperately needs at this critical time. That pillar touches every American. It supports every local economy. It interacts with every business sector, from agriculture to technology. It provides more than 1.8 million high-paying jobs and another 4.6 million related jobs. It is a pillar of our economy that will not and cannot go away. That pillar is energy.
Today, Americans understand that a strong and diverse energy sector is vital to our economic well-being and prosperity. They know that energy produced here at home creates good-paying American jobs, reduces our dependence on others, and spurs the necessary investment and innovation needed to develop all forms of energy. Congress responded to the American public. Its decision to let expire the 26-year moratorium on exploration of the Outer Continental Shelf may prove to be a significant measure in addressing our long-term economic health. The best guarantee of America’s energy security and economic competitiveness is a combination of exploring for more oil and gas at home, intensified initiatives to develop alternative and renewable forms of energy, and continued improvements in energy efficiency and conservation. Responsible, environmentally sound exploration and production of America’s vast energy resources will over time:
• Add more high-paying American jobs across all sectors of our economy;
• Provide billions in new tax revenues that can be used by local, state and federal governments to fund important programs that are at risk due to our current credit crisis; and
• Reduce our dependence on foreign energy sources and the outflow of U.S. capital to foreign countries.
We are optimistic about America’s future and are convinced that our current economic challenges can and will be met. An important step toward that bright future is to make sure that the energy pillar of our economy remains strong, growing and sustainable.
Sincerely,
David J. O’Reilly
Chairman and CEO
Chevron CorporationFrederick W. Smith
Chairman, President and CEO
FedEx CorporationMichael G. Morris
Chairman, President and CEO
American Electric Power Company, Inc.Andrew N. Liveris
Chairman and CEO
The Dow Chemical Company
While we're all going through what's sure to be tough economic times for all of us it's good to see major CEO's in other sectors express a sense of optimism in America and our future while reminding us of that one "pillar of our economy that will not and cannot go away. That pillar is energy"
P.S. Will have a link to this ad as soon as its available!
Comment Update #1- by Streetwise
When it comes to energy and especially oil, America's power elite (the pun is irresistible!) has not served her people well. Politicians and journalists ignore energy most of the time. And when things go badly, they fall back on the time-honored Washington DC reaction of demagoguery and name-calling.
The truth is that the energy markets have been signaling a problem for a long time. In 1980, the big markets for oil were the USA, Western Europe and Japan. The sudden economic expansion of other nations, most especially the new economic giants of India and China, has produced an escalating demand for energy without a corresponding increase in production.. And, no surprise to anyone who knows about markets, when demand goes up faster than supply, prices rise. Imagine that!
Consider the average price of oil for the following periods (monthly averages per bbl, which are used in the commodity markets to settle swap contracts):
Dec 2002 29.39
Dec 2003 32.14
Dec 2004 43.26
Dec 2005 59.45
Dec 2006 62.09
Dec 2007 91.74
This is not rocket science. As the world emerged from the global recession that followed 9/11 and the dot-com bust, the newly resurgent global economy demanded more energy than ever before, and that it be delivered to more places than ever before. Prices, predictably, went up.
A substantial number of observers do believe that a speculative bubble developed in 2008, with oil rising to $145 in July and crashing to the high 80's at the time of this posting. There was a greed factor at work here, but it was driven by Wall Street, not the energy industry and not even by OPEC, which was (justly) worried about the recessionary impact of higher prices.
Many analysts put the true economic value of oil in the $80-$90 range, which means we will be living with higher energy prices for a long time. Indeed, demand will almost certainly increase over the long term. We can either arbitrarily clamp down on demand and impose punitive taxes on energy industry "greed", which will harm economic growth and reduce the supply of energy, damaging growth further. Or we can make better use of what we have and find out how to produce more.
Is there any doubt about which alternative is the wiser?
Comment Update #2: Plus Ca Change- by Streetwise
As the French are wont to say, the more things change, the more they stay the same. The chattering classes like to think of the recent market earthquake as a sudden surprise engineered by Wall Street greed. (The Dow dropped over 7% today). But this has been coming for a while. Sure, the mortgage debacle has had a lot to do with it. But another major factor is- you guessed it- energy.
Dramatic spikes in energy prices and unstable supplies have produced recessions before: 1973-4, 1979-80 and 1990-1. During 2008 energy prices soared. We have a consumer economy that has almost forgotten the art of saving. Downscale consumers, who comprise one of the biggest pools of subprime mortgage borrowers, have no savings cushion to absorb sudden hikes in theire expenses. So the rise in energy was most likely the final straw that broke the back of their effort to carry those mortgages. Likewise, they are amply represented in the restauarant, travel and leisure industries, all of which were decimated by the spike. The whirligig of events hit the economic system like a hurricane.
And the talking heads, as usual, were caught surprised and unprepared. Will they ever learn? And if you need any more convincing that energy is an indispensable pillar of our economy, this is it.
Instead, we have partisan rancor, constant misrepresentations, and a zillion excuses to do nothing.
And look where that has gotten us!