Post-Hurricane Katrina oil profits are at an all-time high, and it could mean changes for the University, which has had historical ties with the industry. Oil companies are among the University’s largest donors and comprise three of the top five donators to the LSU Foundation.
The question some University community members are asking is whether increased profits will bring increased support for the University, especially since the University slashed some of its budget and more budget cuts could come in the future.
But others say that while oil companies’ profits are good, they are making them at the expense of the environment.
Scott Madere, director of public relations for the LSU Foundation, said the increased profits generally mean the potential for major contributions to the University increases.
Since the recent boom in oil profits, the University has garnered increased donations from Shell Oil Co. Shell Oil’s donation of $170,500 was divided among a variety of fields and departments, including the petroleum engineering department, geology department, Honors College and the E.J. Ourso College of Business.
“Oil companies have an interest in LSU because LSU has a long history of excellence in its petroleum engineering and geology programs, and LSU students consistently rank among top recruits these companies want to hire,” Madere said.
Madere said corporations like Shell Oil, ExxonMobil, Chevron Texaco and BP Amoco PLC donate to the University because of the benefits LSU and its graduates offer.
 
BIG PROFITS
The oil industry yielded large profits in 2005. According to the Seattle Times News Service, ExxonMobil earned $36.1 billion last year.
Those profits are a record. The company made more in profits last year than any other company ever has. In October, November and December, the corporation made $16 million in profits each day.
But the wealth extends beyond ExxonMobil. Chevron Texaco reported in the 2005 fourth-quarter assessment that profits were up by 20 percent while ConocoPhillips reported a 51 percent profit increase.
According to the ConocoPhillips Web site, several factors can be attributed to the oil company’s profits such as the efficiency of the corporation’s refining, distribution and marketing systems.
The site said crude oil is the largest element of gasoline’s cost-effective profits, which explains the rapid rise and fall of prices because the world’s supply of crude oil is changing.
But according to data released by the Energy Information System, the number of barrels of finished motor gasoline remained relatively stationary.
In the last week of January 2005, 8,465 barrels of oil were produced. In the last week of December 2005, oil companies produced 8,867 barrels.
Stephen Sears, chairman of the University’s Petroleum Engineering Department, said he thinks it’s logical to expect stronger support in the future from oil companies, but he cannot speak for the companies about whether increased oil profits may increase support for the University.
Lauren Stuart, co-president of the Ecological Conservation Organization, a campus environmental organization, said she would like to see more financial support for the University but is concerned about oil profits being made at the expense of the environment.
“I would hope that as oil companies’ profits increase, they would donate more money to the communities,” said Stuart, economics and international studies junior.
 
OIL AND LSU
Historically, oil companies have been a major financial support for the University. Small and large oil companies donate millions of dollars every year to the LSU Foundation.
“It has been my experience that most companies are very generous in giving back to the students,” said Andrea Songy, president of the University’s chapter of Society of Petroleum Engineers and petroleum engineering junior.
In the largest donation the University received this year, ExxonMobil donated more than $10 million. Both BP and Chevron Texaco donated $5 million to the University. Shell Oil gave more than $2.5 million this year.
“The relationship between the major oil companies and LSU goes back many years, and it’s possibly the most vital relationship we have in the area of corporate sponsorship,” Madere said.
Lod Cook, oil entrepreneur and University alumnus, has donated his time, talent and resources to the University. Cook is the president and chief executive officer of ARCO Gasoline.
Some of Cook’s contributions to the University are the Lod Cook Alumni Center and Lod Cook Hotel, both located on West Lakeshore Drive.
Some say the University’s programs make it an important and attractive institution for oil companies.
“It’s not a one-way relationship at all,” Madere said. “Oil companies help fund major programs and research across campus, and LSU provides them with technological returns and qualified employees for hire.”
 
OPPORTUNITIES FOR STUDENTS
Sears said oil companies donate money as well as offer internships to petroleum engineering and geology students.
“A number of our students in petroleum engineering are interning this summer with oil companies,” Sears said.
Deane Fraser, petroleum engineering sophomore, said internships are plentiful during the fall and summer. Fraser said he plans to intern this summer for Baker Hughes, a worldwide oil-producing and drilling corporation.
Sears said the donated money is used for computer labs, trips to the Society of Petroleum Engineers Convention and a geology camp in the summer among other petroleum-related activities.
And the oil companies’ support is crucial.
“These conventions, such as SPE’s American Technical Conference and Exhibition, would not be possible without support from oil companies,” said Songy.
Songy said the conventions are “a great opportunity for college students to interact with industry contacts and learn about new techniques and equipment.”
 
THE COMMUNITY
The Environmental Protection Agency has classified the Baton Rouge metropolitan area as a serious nonattainment area for its high levels of air pollution, especially ozone.
And many environmental groups blame the oil companies’ chemical plants and refineries as one cause of high air pollution in the city.
Some have expressed concerns about the University receiving donations from companies that damage the environment.
According to data recorded and published by the Louisiana Department of Environmental Quality, in 2003 the ExxonMobil chemical plant released the second-most volatile organic compounds, the second-most nitrogen oxides and the largest amount of carbon monoxide in East Baton Rouge Parish. This totals more than 3 million pounds of VOCs, 5 million pounds of nitrogen oxides and 9 million pounds of carbon monoxide in one year.
The ExxonMobil oil refinery emitted similar amounts in 2003, releasing the third most VOCs, the most nitrogen oxides and the third most carbon monoxide. This amounts to more than 3 million pounds of VOCs, 7 million pounds of nitrogen oxides and 6 million pounds of carbon monoxide.
Both the chemical plant and the oil refinery are part of ExxonMobil’s industrial complex on Scenic Highway in northern Baton Rouge. The refinery and chemical plant combined make the ExxonMobil complex the largest producer of VOCs, nitrogen oxides and carbon monoxide in East Baton Rouge Parish.
Stuart said sometimes oil companies give money to make amends for the negative impact they have on the environment in order to create a favorable image.
“[Shell’s recent contributions] probably have a lot to do with the negative public opinion they are getting because of their controversial [liquefied natural gas] terminal off of the Louisiana coast,” Stuart said.
Madere said Shell Oil has been a leader in rebuilding post-Katrina Louisiana and has increased its level of partnership with the University.
Stuart said Shell Oil may be donating to maintain favorability in the community despite a proposed plant that would use Gulf of Mexico water in a rewarming process on liquefied natural gas platforms.
Stuart said the method harms fish eggs and kills plankton, which would have carry-over effects on other species such as redfish. Stuart said redfish numbers may decline by about 3 percent to 11 percent.
“I think this might affect the University directly because to improve their reputation despite this controversial plan, Shell Oil has been donating money to events like the Jazz Fest 2006,” Stuart said.
Stuart also said oil companies often do not initiate processes of cleaner alternatives without public pressure.
“As far as I can tell, oil companies only compensate for hurting the environment when they are pressured or forced to,” Stuart said.
 
FUTURE OIL SUPPORT
Madere said oil companies and the University will have a close relationship in the future.
“As long as LSU continues its tradition of excellence in petroleum engineering and basic sciences and continues to present unique opportunities to engage the interest of oil companies in other areas, we are sure to have their cooperation and involvement for a long time to come,” Madere said.
A fresco portrait, in the Lod Cook Alumni Center, on campus shows Cook propped against an ARCO Gasoline pump and includes bright colors, illustrating the bond between the University and oil companies. Behind his left shoulder, the University’s Memorial Tower stands in the background and to his right is an oil rig.
“The oil industry has always been a key component of the modern Louisiana economy, and it always will be,” Madere said.
 
Contact Justin Fritscher at [email protected]