Record Oil Profits Should Benefit Communities, Environment By David Gordon

Buoyed by record oil prices, oil giant Exxon-Mobil announced in January that it had made a profit of $8.4 billion during the last quarter of 2004, a U.S. record. Royal Dutch/Shell announced a profit of $10 billion for the same period, the largest U.K. corporate profit in history.

The oil companies claim they plow that money into jobs, development of clean energy technologies, and other things you could undoubtedly get behind. But if Big Oil is serious about investing in the people and places that made these profits possible, or about protecting the environment, there are a few things they could do with their windfall.

With a bit more than half of its profit from the last quarter of 2004, Exxon could pay off the court-ordered judgment of $4.5 billion to pay restitution to victims of the Exxon Valdez oil spill. For more than 15 years, the company has fought efforts to make it pay for the damage it caused to fishermen and communities in Alaska's Prince William Sound. Why not cut a check today?

Speaking of Alaska, the oil companies and their allies in Washington keep telling us that the oil under the Artic National Wildlife Refuge is essential to breaking our dependence for oil on perpetually unstable places like the Middle East.

But imagine what an investment by Shell and Exxon of their combined profits from the last quarter of 2004-nearly $20 billion-could do for renewable energy technologies, the true route to energy independence. With an upfront investment of $100 million approved by voters, San Francisco is building solar and wind turbine capacity that will power a quarter of that city's government electricity usage. $20 billion would allow for 200 such projects around the country.

At the very least, the oil companies should be doing their level best to take care of the people and environment where they are drilling for oil right now.

On Sakhalin, a remote Russian island just north of Japan, Exxon and Shell have made some of the biggest investments in Russia's history in oil and natural gas extraction. But the native people who live on Sakhalin have had their reindeer pastures trampled, their salmon streams sullied, and their cod fisheries damaged by the construction.

In January, hundreds of local natives came out in -30 Fahrenheit weather to blockade roads to the Shell and Exxon construction sites. They asked for an independent assessment of the harm caused to their livelihoods, mitigation of these negative impacts, and compensation for their losses.

These same oil projects threaten a critically endangered population of gray whales. Only about 100 of these magnificent animals remain and an independent scientific panel requested by the oil companies themselves reported this month "the loss of one additional adult female…would be sufficient to drive the population towards extinction."

With just a fraction of their profits from last quarter, Shell and Exxon could agree to the demands of the native people on Sakhalin Island and provide them with compensation for their losses. With a bit more, the companies could revise their projects to ensure that oil and gas drilling don't drive the Western Pacific Grey Whale into extinction.

In other words, Exxon and Shell and their peers have a choice. They can continue to reap record profits and pay off their shareholders and the politicians who protect them. Or they can invest in a future that frees us from oil dependence, benefits local communities, and protects pristine ecosystems. In the long-term, it's really not a tough choice. It should be the only choice.

David Gordon is Executive Director of Pacific Environment.