Editing 79-09-A5 (section)

=== Transcript ===
I'm aware that there are hazards in saying a kind word about the oil
industry; aware that the major oil companies are seen by many as all powerful
institutions responsible for smog, inflation, congestion, urban sprawl, chillblains
and dizziness.

In spite of this I don't feel they deserve the abuse they've been getting
from political demagogues. One thing is certain we stand a lot better chance of
getting the oil and gas we need from them than we do from our $12 billion
Energy Department whose 19,000 employees deal in paper not petroleum.

England's great statesman Disraeli once said "there are lies, blankety
blank lies and then there are statistics." So it is with our energy crisis.
Recently the White House gave the populist media ammunition for it's assault
weapons when it cited accusingly, Texaco for having had an 81 percent jump in
profits for the first quarter of 1979.

Now that was not a lie -- it was a statistic. There is no question but
that those facing long lines at the gas station saw this as evidence a rip off.
An 81 percent increase in profits brings an image to mind of almost doubled
prices leaving our pockets and ending up in Texaco's money bag.

Well let's use some additional statistics to put things in focus which the
White House could have done but which it neglected doing.

The 81 percent increase for the first quarter of this year was the increase
over the rate of profit for the final quarter of last year which was 2.4 percent.
That means Texaco got 2.4 cents out of each dollar of sales last year and with
the increase was getting in the first quarter of this year 3.7 cents which
translates out to 1.6 cents for each gallon of gasoline. If they didn't take
any profit at all there wouldn't be much of a drop in the price of gasoline.

Translating even further the meaning of these statistics, we find the
dividends to stockholders were a little under 6 cents for each dollar invested.
U.S. Treasury notes are paying almost a dime, 9.6 cents on each dollar.

Over the last five years total oil industry profits came to $61 billion
and that's a lot of money . So is the $130 billion the industry paid to federal
and state governments in taxes. And we aren't talking peanuts when we add that
the oil industry spent about $126 billion in exploration and development.

Actually oil industry profits as a whole run pretty close to the average
of all industry in America and considerably less than some of the top
businesses such as I.B.M.

The Department of Energy estimates that 30 to 35 billion dollars a year
must be invested in exploration and development by the oil industry just to
keep us even with the amount of oil we are producing now.

It would be nice if we could invest more and produce more because we've
sent $165 billion to foreign producers over the last five years. 

This is Ronald Reagan.

Thanks for listening.
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