FROM: US government
TO: US oil and gas industry
SUBJECT: Your responsibilities
Several recent developments in the nation’s capital have highlighted the expectations your country has of you. Various hearings, letters to your trade associations, and proposals for legislation and investigations make clear that, against these expectations, you have failed to live up to your responsibilities. In the event you have not until now understood those responsibilities, this memorandum is offered in the spirit of helpful cooperation.
1. You have a responsibility to invest in exploration, production, refining, and associated activities essential to the delivery of affordable oil products and natural gas to US energy consumers. In any assessment of your performance under this responsibility, past investment, regardless of size, and past deliveries of oil and gas at prices low enough to escape political notice, regardless of duration, will be deemed inadequate and evidence of your failure. Future investment also will be deemed inadequate if at any time the prices of oil products or natural gas reach excessive levels. The definition of “excessive” will be determined at a later date.
2. Although your government expects you to increase your investments in the US, you should not expect the government to make opportunities, such as leases on unexplored federal acreage, available to you.
3. Profits on your investments will not be tolerated to the extent they coincide with increases to excessive levels in the prices of crude oil, natural gas, or oil products. The definition of “excessive” will be the same as that specified in Item 1. For the purposes of this delineation of your responsibilities, the meaning of “profit” will be confined to total earnings; reported profits will not be analyzed in the context of other financial parameters such as revenue or investment.
4. Profits coincident with prices above excessive levels (see Item 3) will be construed as grounds for suspicion of price-gouging, which will be defined at a later date.
5. During supply emergencies, you are expected to keep oil products and natural gas flowing to consumers in required quantities at prices that are not deemed to constitute price-gouging (see Item 4).
6. When suspicions of price-gouging are triggered by conditions defined in Item 4, executives of your largest companies will be summoned to hearings at which they will be expected to explain the phenomena. For the purposes of these proceedings, the following explanations will be deemed insufficient:
a. Profits of oil and gas companies typically change as a function of the prices of oil and gas.
b. Prices of oil and gas typically change as a function of the sufficiency of immediately available supply relative to contemporaneous demand.
c. Sudden disruptions to supply, such as may be occasioned by damage from natural disasters, increase prices, especially when conditions described in Item 6b already have caused them to rise.
7. Inadequacy of explanations about movements of prices and profits, subject to limits in Items 6a-c above, will be construed as further evidence of price-gouging per Item 4.
8. While the hearings described in Item 6 will be conducted in the interest of public enlightenment and in the spirit of cooperation with lawmakers responsible for enactment of energy policy serving the broadest national interests, testimony showing any hint of conflict with past statements by any interpretation will be grounds for prosecution.
9. In anticipation of the inadequacy of your explanations about why prices and profits rise, you should factor into your decision-making taxes designed to punish you for price-gouging, as defined in Item 4, imposed at levels to be determined at a later date.
10. This government reserves the right to apply the strictest possible environmental regulation to your operations, even when a less-restrictive regime would serve equivalent environmental goals but favor the economics of your work.
11. This government reserves the right to hold you publicly accountable for any increases in the price of fuel that may result from energy legislation the compliance with which raises the costs of manufacturing and handling fuel.
12. This government reserves the right to change these responsibilities at any time without notice.
Good luck with your investments, and have a nice day.
Suspiciously,
Your government
