Chevron approves $15B buyback program

SAN FRANCISCO — Enriched by high oil prices, Chevron Corp. will spend up to $15 billion buying back its own stock -- a commitment that pleased shareholders and rankled critics clamoring for bigger investments in projects that might help lower energy costs.

The three-year repurchase program announced Wednesday served as yet another reminder of the cash cascading into the oil industry while motorists have been trying to cope with higher gasoline bills.

The dichotomy has triggered Congressional threats to repeal some of the industry's tax breaks or impose a special tax on profits above a certain threshold.

"Chevron is free to do what it wants with its money, but this is going to fuel the fire for Congress to get involved," predicted Tyson Slocum, director of the energy program for the consumer watchdog group Public Citizen. "The money they are funneling for shareholder goodies leaves less for other projects."

Chevron Chairman David O'Reilly defended the stock repurchases as the "appropriate" thing to do with the second largest U.S. oil company on pace for its fourth consecutive year of record profits.

Since the end of 2003, San Ramon-based Chevron has earned a total of $54.7 billion -- a performance that has more than double its stock price to create more than $100 billion in shareholder wealth. The company's shares gained 63 cents to finish Wednesday at $92.51.

Chevron already has returned some of its past windfall to shareholders by pouring $15 billion into previous stock repurchases during the past 3 1/2 years while distributing $13.8 billion in common stock dividends.

After learning of Chevron's latest stock repurchase plans, Rep. Bart Stupak, D-Mich., reiterated his intention to fight for a new law that would require the Federal Trade Commission to crack down on high gas prices.

"Like the rest of Big Oil's recent record profits, this stock buyback is being financed by consumers who are gouged at the pump and who are at the mercy of Big Oil's manipulation of oil and gas prices," Stupak said.

Industry analyst Fadel Gheit of Oppenheimer & Co. said Chevron and its industry peers are simply being good stewards by sharing the wealth with their owners.

"None of these guys thought oil would be above $60 per barrel, let alone $80 per barrel," Gheit said. "The market has been generous to them, so now they are being generous with their shareholders."

Exxon Mobil Corp., the world's largest publicly traded oil company, has returned $88.5 billion to its shareholders through stock buybacks and dividends since the end of 2003.

Stock repurchases are commonly used throughout corporate America to reward shareholders and boost earnings per share by diminishing the number of outstanding shares. The buybacks also increase the amount of stock available in the corporate treasury to finance acquisitions.

Slocum and many lawmakers want big oil companies to divert some money away from shareholders to finance initiatives to expand energy supplies and develop alternative energy sources.

Royal Dutch Shell PLC took a step in that direction last week by announcing plans to nearly double the size of an oil refinery on the Texas Gulf Coast. That expansion, which also involves Shell's Saudi Arabian partner at the Port Arthur refinery, is expected to cost $7 billion.

Although it hasn't tackled anything that ambitious, Chevron has increased its gasoline manufacturing capacity in the United States by about 6 percent, or roughly 1 million gallons per day, in recent years. The company said it is also mulling several other projects that could further boost capacity.

Chevron spent $36 billion on oil exploration and other projects from 2004 through 2006. The company expects to spend $19.6 billion on capital and exploration projects this year, a $3 billion increase from last year.

The American multinational oil company, Chevron has current television ads which sound like the trailers for global warming documentaries. "Our lives demand oil," the narrator says, and continues with "Oil, energy, the environment. It is the story of our time." The ad goes on to cite a few facts: "It took us 125 years to use the first trillion barrels of oil. We'll use the next trillion in 30." The ads are similar to British Petroleum's ads which claim they now stand for "beyond petroleum."

Chevron's manager of external affairs said, "We say we're an oil company, and we say the world will need oil and natural gas, and we're very direct about that. But we're also saying we need to invest in alternatives in a way that makes economic sense."

Henry Ford is rolling in his grave. The American automobile manufacturer was ahead of his time. His Model T ran on corn ethanol, and he envisioned a time when cars would run on ethanol. However, as former Republican strategist Kevin Phillips outlined in his book American Theocracy: The Perils and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century, the U.S. became enamored with petroleum after World War One. Phillips comments in his book, "America's prevailing 20th corporate, transportation, energy, and residential infrastructure was being shaped around petroleum."

Chevron's ads do not mention Ford's vision, or how the oil industry trumped it. Should viewers be surprised? Advertisements from top oil companies claiming they are going "green" should remind viewers that the roots of public relations, and advertisements, come from propaganda. In 1916 U.S. President Woodrow Wilson asked journalist George Creel to head up the Committee on Public Information. The purpose of the Committee was to market World War One to a reluctant public. The father of public relations, Edward Bernays was on the Committee.
Propaganda is all around us in the 21st century, creeping like the kudzu vines that grow in the American south no matter how much they are chopped or sprayed with pesticides
green because they have invested in renewables, but they leave out the fact they are a century late. The cliche, better late than never, does not apply. The planet is burning because it is filled with greenhouse gases.
green because they have invested in renewables, but they leave out the fact they are a century late. The cliche, better late than never, does not apply. The planet is burning because it is filled with greenhouse gases.