Skip to comments.Big Oil Makes a Spectacle of Itself
Posted on 05/16/2011 3:08:53 PM PDT by Snark
Its a ritual. Every time gas prices skyrocket, the Big Five oil companies get called on the carpet by Congress. Last week, they outdid themselves defending their obscene profits and ridiculing the idea of cutting their $4 billion annual tax subsidies ($21 billion over the next decade) from the U.S. governmentthat is, from you.
"ExxonMobils first-quarter earnings of $10.7 billion are up 69 percent from last year. Other oil companies are also scoring record gains. The five biggest oil companies together report more than $35 billion in profits."
I realize that there is extremely large overhead with the oil industry and the $10.7 Billion doesn't all go into their pockets but Mobil's net last year was 8 Billion dollars.... And we hand them 4 billion a year (and $4.15 a gallon). Infuriating.
We don’t “hand” them anything. It’s an upfront tax break on the cost of exploration. By the way, you need to post a live link.
Lets see, Conoco Phillips.
11bl in earnings
8bl in US taxes
3bl in foreign taxes.
Yup, their profits are certainly obscene.
Their profit in terms of percent of sales is not out of line at all.
The last I read, something like 8.75%.
The big numbers come from big volume and if you have not thought about it, with big volume comes much much bigger risk.
For instance, if I sell you the only thing I own and it is in the back of my pickup, there is no risk to speak of. If I have to give it away, there was only one item. Unless it was a gold brick or a diamond the size of a bushel basket risk is not of the magnitude that will destroy me..
When you deal in millions of gallons of fuel and have manufacturing and distribution facilities all over the world, one mistake can kill you.
Besides, where does that “obscene profit” go?
What do they do with it?
Surely you don't think they keep it under the bed.
Buy more stock, maybe in the same company but likely split it up and buy into other companies.
Why is that important? Well think about when Lowe's was opening 20 or 30 new stores a year, as was Walmart.
Where did that money come from? Mostly from sale of stock.
If there is not a good return on stock, either in dividends or in appreciation in value, no one buys it and no new jobs are created.
Besides, if you have any investment program of any kind at all, it is very likely that there are some petroleum based companies in your portfolio.
Most people that rant and rave about “obscene profits” have zero understanding of how our system really works.
It’s the first time I’ve posted a news article. I had my fingers crossed on whether it would post correctly or not.
Sorry about that.
And you are right about the subsidies, but we are ticked off at GE and their annual tax subsidies. I don’t HAVE to buy a GE dishwasher or even fly in a plane with GE engines. I have a choice there. I HAVE to pay $4.15 a gallon when these guys are literally raking in money hand over fist. These guys are and have been for many years, crooked. Unless you are Amish, there’s no way around handing them money.
"The CEOs from the five major oil companies -- which together booked $36 billion in profits in the first quarter of 2011 alone -- went to the Senate on Thursday to try to justify the $4 billion in tax giveaways they're receiving this year."
You see, I know that for every dollar of profit, oil companies have paid about three dollars of tax. I also know that for the fourth quarter of 2010, Exxon-Mobil made a profit of about 2 cents on every gallon of gasoline sold, whereas the federal and state governments made over 50 cents "windfall profit" per gallon through taxes for doing absolutely nothing in locating, drilling, refining, and delivering the gas.
I also know that most of those "tax giveaways" go to small, independent oil companies, not the big corporations. I know that eliminating long standing tax deductions (the things you guys mislabel as "giveaways") will help big oil by eliminating competition. Hmm, which big oil company gave Barry Obama 20 billion to use for something that still hasn't happened? What is Barry planning to do with the loot? I know that Barry's favorite "green" technologies have received far more subsidies than the oil industry and they produce and will produce almost nothing of America's energy. So, in dollars spent for unit of energy gained, wind, solar, ethanol, and geothermal are among the biggest wasters of taxpayer money in the history of energy.
It's people in the millions seeing the ruin that Barry's Soros-directed policies have made of a strong and prosperous nation and determining that they're not going to be fooled again.
Something is happening.
It's the last grains of sand in the hourglass rapidly draining away. Get ready to find private sector employment.
It has been shown time and time again that the big oil companies DON’T get that $4 billion tax break. Congress made sure of that in 1975. In addition, for every gallon that the oil companies sell as gasoline, they profit appx. 2 cents. Federal, state and local gov’ts average 48 cents per gallon.
One more: Exxon/Mobil, Shell, Chevron, Conoco Phillips and BP control less than 7% of the world’s oil reserves COMBINED! Approximately 82% of the world’s reserves are controlled by Foreign Governments, most of whom don’t like the US. So, we demonize the oil companies? I say DRILL!
If I owned a ton of gold and the price goes way up then I profit more too without secretly doing anything but having an asset that goes up in value.
Where were these Democrats complainingabout collusion when I was paying $1.38 for gas six months before Obama was elected?
Their profity margin is actually 6.2% which is relatively small in comparison to many other corporate entities that no one seems to bitch about.
What we hand them is no more or less then a lot of other companies. If you want to get mad, get mad at the Obama administration and the liberal progressive azzholes for refusing to open up areas for drilling along with the speculators that are also driving up oil prices. Oil companies don’t set the price of oil.
Microsoft : 31.85% profit margin.
McDonald’s Corporation : 19.78% profit margin.
JPMOrgan Chase : 17.86% profit margin.
Nike : 10.30% profit margin.
General Electric : 8.73% profit margin.
BP : 8.07% profit margin.
ConocoPhillips : 5.20% profit margin.
These arguments about “obscene” profits are completely stupid.
GE’s subsidies are just that, subsidies for their BS green tech projects that nobody wants or needs.
Big Oil’s subsidies are not that at all. They are standard tax deductions just like any capital intensive business. You’ve bought into too much of the libtard spin as your baseline template.
Hey, how about we limit the oil companies profits to the same percentage as the taxes charged by the US government?
Lets see, according to the DOE in Nov 2010, 14% of every dollar goes to taxes on gasoline. How about we limit Big Oil’s profits to 14%?
[research the profit margin of your “Big Oil” very carfully before you answer that question]
Then ask yourself, how much of the corporate tax burden is passed on to consumers to maintain that profit margin.
LOL ... yer getting hammered ...uh .. and not to pile on. but .. AND ANOTHER THING! Part of the “Big Oil Subsidy” nonsense is ...uh ... nonsense. The Big Boys haven’t used Depletion Allowances since 1975. That one is aimed squarely at the “Little Guys”.
Little Guys produce half of our domestic crude and they have no way of passing on the cost of a new theft (on the part of Government) to consumers. They will throttle back on production. I guarantee it.
And to further back up your point. Please watch the video. A former Democratic congressman points out the danger of Obama continuing to “misrespresent” (we call it lie) this point:
Anyone that wants to send this to the guy who wrote the piece, go for it.
They put almost all of it back into the ground. It is not like they have a giant vault somewhere. Also, the Intangible Drilling Cost right write off is the same manufacturing write off that manufacturers (like steel for GM cars, etc.) In addition, the Oil and Gas Industry pay more taxes than any other domestic industry. Most of the liberals know all of this, but they go to where the money is.
Big oil should stop selling to the dam gov., do an Atlas Shrugged on ‘em.
1) buy an electric car
2) grow your own sugar beets, put in a still and brew your own ethanol or butanol
3) raise peanuts and produce your own diesel from the peanut oil
4) gather used vegi oil from food joints and reformulate into bio-diesel
5) Take public transportation (not a 100% option as the buses still use oil/gas/diesel)
6) convert your vehicle to run on Natural Gas (may not be a 100% option as some of the NG comes from big oil)
7) Buy, feed, maintain and ride a horse
8) ride a bicycle
9) bum rides from your friends (again, not a 100% option as they are paying big oil and will eventually want some money to cover their costs)
There are pros and cons with each of those options. Most people don't like the cons so much that they are willing to trade dollars to avoid those inconveniences.
IT IS A CHOICE
BTW, what is wrong with making a profit? And just exactly when does a profit become obscene? Is it the $100 Millionth dollar? If the company stays below $100 M have they avoided being obscene? Lets put this into personal income perspective. When is a raise obscene for you?
This is a perfect set up for crony capitalists and their whoring representatives. The representatives get lobbied (i.e. bribed) to do the bidding of those corporations that spend their profits bribing congressional whores. Those corporations that spend their profits on R&D, etc. are left to the vagaries of the market.
Changing the current system is near impossible. Anyone who suggests a tax rate reduction is accused of being a tool of the corporations. Anyone who suggests the elimination of a deduction or tax credit is accused of being a socialist.
A better idea would be to have a relatively low tax on gross receipts with no deduction of any kind or tax credits of any kind.
That way businesses would compete on quality of products/services and pricing rather than on government whoring.
Of course that will never happen, but one can always dream.
Blogpimp troll pong.
The economic illiteracy needed to buy into the idea that adding taxes to an industry that earns a paltry 6 to 7 % rate of return doing something absolutely essential to our well being and national defense because they make “too much” profit, which is about a third of all the taxes paid on what they produce, will somehow do anything but further ratchet up prices and hurt the economy is stunning.
(Hint: People can’t cut back on driving much more, so the price curve is reaching inelasticity, and the costs will just get passed on to the people at the pump - and those buying food, clothing, and everything else because most stuff is delivered to point-of-sale by truck.)
That so many Americans buy into is even more stunning.
That a Freeper, even a relative newbie, does is astoundingly stunning.
The oil companies shouldn’t be taxed at all!
“Big Oil” didn’t pay billions of dollars in taxes...YOU DID!
Yep, maybe. With the conclusion of the FReepathon, the phaser banks are fully charged.
Drive by post? Spewing economically illiterate obama talking points? No responses? Blog pimping?
Gonna have to add my IBTZ to yours.
Shout it loud and often!!
Besides, since when do we hold in contempt companies that are actually making a profit?
BTW, those profits pay dividends and returns to City and State pension plans.....and here the Gubmint wants to disparage them.
Talk about stepping on your own ****
1) Since 1977, US oil companies have paid 584 Billion in corporate income tax.
2) Since 1977, ALL American oil companies have earned just under 600 billion in net profit.
3) Since 1977, American Oil Companies have collected and turned over 100% of additional fees and taxes to the Federal government, that were collected from consumers at the pump... in the amount of 1.27 TRILLION dollars! Now exactly who is ****ing whom?
What is infuriating is seeing otherwise rational people imply that the oil and gas industry is somehow dishonest or fraudulent for making a fair return on huge sums of capital invested at very high risk.
No one hands the industry anything; they are simply allowed to deduct real costs of doing business just like any other business. The way I understand the concept, income equals revenue less costs. What the democrats are attempting to do is tax these companies on money they did not make, because it was paid out to defray real costs.
Once again the media obligingly follows the party line and redifines a well understood term like “tax deduction” and begins to call it a “subsidy.” Before long, even people I once took to be sensible and conservative start smoking this dope, calling these tax provisions “loopholes.” Case in point, John (Bonehead) Boehner.
The fact is that these provisions are necessary to encourage investment of capital in a business where a $5,000,000 investment may be totally lost on a dry hole. To me it is amazing that the oil and gas industry has succeeded in keeping us as well supplied with oil and gas as they have.
The states and the federal government gas taxes take a bigger junk of the $4.00/gallon price at the pump than do the NET profits on that $4.00 by the oil companies - less than 8 cents on the dollar after the dealer and the distributor take their cut.
Combined State & Fed. Taxes Per/Gallon
At a theoretical $4.00/gallon, in California, the state of California keeps 47,2 cents, the federal government takes 18.4 cents, for a total tax take of 66.1 cents. And, at a rate of about 8.75 cents on the dollar (of THEIR revenue, not counting the retailer and the distributor), the oil company might NET something under 35 cents on the gallon, or something near half what is taken in taxes.
Notice also that in all but four states the net take in taxes in higher than the net profits of the oil suppliers.
So who is it that is “gouging” on the retail price at the pump?
In how many states does the gasoline tax revenue go 100% exclusively to the state’s roads; exclusively back directly to the consumers paying the tax?
The other problem with the gas taxes is that in an environment when the basic cost of the product is rising, encouraging people to buy less, means they are encouraged to drive less, which means they are encouraged to consumer fewer gallons of gas, which means the higher the tax (like California) the greater a decline in gas tax revenue.
In fact, it was not so long ago that the California legislature acknowledged that: “Oh, gee, people ARE driving less, so we’re getting less from the gas tax”; and concluded: “so, we should raise the gas tax”. Notice who now has the highest gas taxes and the highest gas prices. Stupid is as stupid does.
Their idea of a "subsidy" in this case is to give a break on that percentage.
I am tired of hearing about the crooked oil companies. The government makes much more off of every gallon of gas than the oil companies do. If they were really crooked, couldnt the oil companies do better than that? The recent dramatic rise of gas prices is attributable to the policies the Obama regime has been pursuing, not because of the oil companies flexing their muscles to screw over the consumer. Between the Obama regime inflating the hell out of our money supply with QE1 and QE2, shutting off all drilling in the gulf and denying oil companies the permits to drill elsewhere the current rise in fuel prices was easy to see coming. For example, Shell recently spent billions of dollars to prepare a lease for drilling in Alaska. The Obama regime had the EPA deny them their permit to actually drill. Do you think that decision made oil cheaper? The Senate hearings were also easy to see coming as that is what the Rats do every time oil prices predictably rise as a result of their idiotic, Sierra Club driven policies. Rats have been calling in the oil company executives to investigate them every time oil prices have increased for the last 40 years. In all those investigations they have never found anything illegal. The only reason the elected Rats do this is to deflect blame away from themselves, where it belongs, and to convince their stupid, business hating supporters that they are on their side against the big, evil, crooked oil companies. I have noticed that they never investigate the oil companies when the prices go back down. Obama said during his election campaign under my policies, the price of energy will necessarily sky rocket. Given what his regime is doing to hinder/destroy the oil, coal, nuclear and natural gas industries in the USA, that is the only unequivocally true statement I have ever heard him make. I do not understand how anybody can pin the blame for high oil prices anywhere but on the Rats and Obama. Why would any sane person expect anything different to happen to oil prices under the policies implemented by Barkys regime?
I hate RATS. If I remember correctly, ExxonMobil paid an effective 47% tax rate - that is too high, and I hate anti-American, anti-Capitalist whining about people making a decent profit.
That’s 4 billion the government doesn’t take from them/us. Big difference from giving.
The same people bitching about the profits of the oil industry are the people who want US gas prices to be in line with that of Europe. If that were to ever happen, what do these rocket scientists think will happen to oil industry profits? Shell, Exon, and Chevron will be crapping in taller cotton. These people are morons, they do not understand the effects their idiotic policies have.
I have no problem with the profit the oil industry makes. They provide a vital service along with thousands of good paying jobs.
Explain to me, please, how raising their taxes will reduce the cost of a gallon of gas?
The Federal and State governments make 10 times as much PROFIT as the oil companys do..
for DOING LITERALLY NOTHING..
The same governments make profit also on refining and transporting oil and petroleum products..
Same with gas, coal and nukes..
Are you sure THEY are getting $4.00 a gallon?
A tax break is not a subsidy.
ETHANOL gets 6 billion in subsidies!
That's a BIG number all right; But so what?
What PERCENTAGE of ASSETS is that?
That's a BIG number all right; But so what?
What PERCENTAGE of ASSETS is that?
Stunningly stupid, noob. I hope the thread set you straight. Worry about real handouts to unions and dead end "green economy" smoke and mirrors.
Buy a clue before you post more crap like this.
I don’t understand how raising taxes on the oil industry will make gasoline cheaper.
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