Sheldon Whitehouse Wants To Nationalize America's Oil Companies

This morning on CNBC, Rhode Island Senator Sheldon Whitehouse aired his views on why the US Senate should be directing America's oil companies on how to spend their investment capital.

Though he attempted to deny it, he commented several times during a discussion with the CNBC co-anchors and another guest that oil companies' shareholders' interests were subordinate to those of Congress.

Among Whitehouse's 'ideas' are, of course, Congressional mandates for oil company spending on non-petroleum projects and Federal funding of a 'green economy.'

Can you say "illegal takings," Sheldon? Or "appropriation of private property?"

As I wrote in this post on my companion business blog earlier this month,

"ExxonMobil is now a public company. Isn't it the height of arrogance for the great-grandchildren of the company's founder to be dictating strategy to this very successful petroleum-based energy giant?

Additionally, as I wrote in my BP post of last year, there's the question of why a current petroleum giant would have any particular advantage in wind or solar energy generation and transmission. It would seem that neither of these renewable energy sources share much of any technology with oil exploration, refining and distribution. Thus, it's a likely waste of shareholder resources for an oil firm to go chasing after other energy sources. This is precisely the type of mistake that Tillerson and his team should avoid, and prevent a small group of vocal environmentalists with an axe to grind, who happen to be the progeny of the company's founder, from forcing him to make, to the detriment of other shareholders.

Finally, there's Schumpeterian dynamics at work. As my February post noted, ExxonMobil is currently on the way to becoming more of a refiner and distributor of oil and its refined products, as it fails to find and own sufficient reserves to replace its recent production.

In the current environment of nationalistic lockups of oil reserves in the ground, it could well be that ExxonMobil pumps out its own petroleum assets, refines them and what it can buy on the open market, such as it will be, and perhaps even go out of business with one last large dividend, as its reason for being simply evaporates.

That's what happens to companies whose best operating environment and salient reason for being disappears. Then shareholders can use their proceeds to buy other equities which they feel may bring them consistently superior returns."

But, Sheldon Whitehouse is a liberal Democrat. Why would we think he'd look for a "solution" to current oil prices in market dynamics?

To begin with, Whitehouse doesn't seem to understand that market dynamics determine oil prices. Well, he alleges that oil prices are "too high" because of "speculation," suggesting that such buying and selling of oil futures is somehow bad. Is it illegal, too, Sheldon? Or, if not, will you be making it so ASAP?

Here's an idea, Sheldon. If you are so convinced that America needs more wind, solar and other renewable energy sources, why don't you and your upper-chamber-plurality Democratic colleagues pass legislation setting out clear tax preferences for such energy source for a defined time-period. While you're at it, pass legislation to allow drilling for oil and natural gas in ANWAR and off America's coastal shelves, easier construction and operation of nuclear power plants, and easier use of coal and natural gas for power generation?

Both parties have fumbled on these issues. Republicans should have siezed their opportunity when in the majority of both Congressional Houses and pushed such legislation through. Perhaps now that more Americans are concerned about energy prices and sources of supply, even liberal Democrats will come to their senses.

But if Sheldon Whitehouse is any sort of example, I think we'll be waiting a lot longer for this to occur.