Short Term Results, Long Term Failure…

Are the big oil and gas companies headed for trouble?  With several of them posting record profits this quarter, one would think not.  The industry is enjoying the rare benefit of increased demand along with surging prices.  The cash is rolling in.  Life is good.

But one wonders how sensitive these behemoths are to a potential backlash from the American public for profiting at their expense.  As we head into winter, the gap is likely to worsen. Oil and gas consumption will increase, causing a further dent in consumers’ wallets.

I’m not anti-business and I’m not advocating that these companies should not be profitable so we can drive around in our SUVs and purchase cheap gas without reservation or concern.  However, if I were the communications chief of one of the these oil companies, I wouldn’t be waiting around hoping that the American public doesn’t wake up and take action.  Instead, I would urge my management team to use a small percentage of those profits to benefit a cause that would help some of the people who are hurt by the rise in energy prices.  I would use it as an opportunity to preempt any consumer backlash and use it to strengthen the company’s reputation.  I would send a clear message to all of my key stakeholders that while critical, the bottom line shouldn’t be the only measure of success. After all, the price tag on any company’s reputation is likely to be a lot higher.

Unfortunately, I don’t know of any oil company that has adopted this strategy.  Wall Street is too focused on near term results so management teams are too focused on profits.  Time will tell how this all plays out but ignoring the issue and continuing to reap the benefits at the expense of customers is akin to throwing fuel on a fire.

One thought on “Short Term Results, Long Term Failure…

  1. I couldn’t agree with you more, Blogman. The pain consumers are feeling at the pumps, coupled with the news of these enormous profits, will create a backlash that smart oil companies will try to head off at the pass.