Smoke and Mirrors

In this article from the Philippine Daily Inquirer, Congressman Golez calls for the auditing of the books of the three biggest oil companies in the country (Shell, Petron and Caltex). I have a couple of comments on this:

First, in calling for an audit, the government should make clear what an "excessive" rate of return is. If there are no clear definitions, then this audit can quickly turn into a form of harassment.

Second, once again, the oil companies complain that they are "losing" or "will lose" money in the current environment. However, this has not stopped them from declaring cash dividends to their stockholders. And last I checked, you usually do not give out cash if your company is losing money.

Third, all the protesters and activists should quit clogging the streets and causing traffic jams since nothing they do will truly change the way oil firms do their business. Yes, they may get the odd price-rollback every now and then but no matter how loudly they scream or how many slippers they throw at the head offices, nothing about the way these firms are run will change. If they really want to make a difference then they can chose to either work from within the industry or from without. How? I have the following ideas....

If they want to change how the oil firms operate, then one thing they can try is to work from within. Specifically, all of these groups should pool their resources and buy shares of the oil firms. (Yes, even the unlisted ones do have shares that are traded in private placements.) Once they are shareholders, they then have access to the firms financial documents and can directly question the directors and top management during the annual meeting. If they are truly militant, they can even try to get one of their own elected as a director and have a bigger say in how a company is run. (Also, I would like to find out just how strong their beliefs are once they themselves start receiving the annual dividends these firms declare.)

Alternatively, these groups can put their heads together and come up with programs that will wean people away from unnecessary oil usage. A good, simple and doable program would be for all of the public transport groups to sit down and to agree to drive responsibly. Think about it, a lot of fuel is wasted due to traffic jams caused by errant, undisciplined drivers. If all bus, jeep, taxi and tricycle drivers agreed to drive properly and not stop indiscriminately and if all operators properly maintained all their vehicles; I am sure fuel consumption will be lowered significantly.

Actually, an ideal setup would be for these activists to become stockholders of oil companies and to use the dividends to fund programs that would lower oil consumption. That, I think, would be a more productive use of their time and resources and would have a better long-term effect than pelting an inanimate building with slippers and tomatoes.