Skip to comments.Big Oil Profits Arenít Excessive ó The Left's Rhetoric Is
Posted on 04/04/2012 4:21:59 AM PDT by SeekAndFind
One of the most effective arguments used against the oil industry is that it earns "excessive" profits that must be taxed away. But as with the rest of the left's failed energy agenda, it's based on pure falsehoods.
With prices for crude above $100 a barrel, it's no surprise the news media are fixated on oil companies' "record profits."
Predictably, Democrats and others on the left use rising profits to bludgeon "Big Oil" and push more subsidies for money-losing "green energy" schemes while working to raise taxes and kill subsidies for oil.
"When the price of oil goes up, prices at the pump go up, and so do these companies' profits," President Obama explained last week, calling for higher taxes on oil companies.
"Meanwhile," he added, "these companies pay a lower tax rate than most other companies on their investments partly because we're giving them billions in tax giveaways every year."
A new attack ad for an Obama-linked political group excoriates the oil industry for its "record profits and ... billions in special tax breaks."
On closer inspection, those profits turn out to be nothing special. Government policies have driven up the price of oil, which has boosted oil companies' total profits. But their profit margins the best measure of industry profitability remain modest.
As of the third quarter of last year, the oil industry earned just 6.7 cents per dollar of revenue, less than the average for all manufacturing of 9.2 cents (see chart).
(Excerpt) Read more at news.investors.com ...
which is more expensive? A gallon of gas or a gallon of printer ink?
The lefties I work with are all up in arms about the subsidies that the oil companies receive. Not sure how to counter that. Any ideas?
Seems to me, the federal tax take by government on a gallon of gas, is greater than the profit by the companies that explored, drilled for, moved to refinery, refined and distributed to the gas station.
I have read that the oil companies make about 2 cents per gallon of gas. Conversely, the State of Ct makes .25 cents a gallon in taxes. So who's the greedy one?
I clicked over and read the whole article and it gave a lot of good arguments about why the left’s rhetoric is excessive.
It didn’t mention the fact higher earnings would attract more investment in the industry, leading to more supply, which then lowers prices - the simplest argument for the market system versus top-down price controlled system preferred by the leftists.
Perhaps that argument is considered to be too difficult to understand, or too hard for the average person to make the connection.
Ask for a list of all those supposed subsidies. From everything I know they are nothing more than business tax deductions enjoyed by every business. Subsidies means government is cutting a check to business, and that is just not true in the case of oil companies. True lefties should not even be buying gasoline with their pie in the sky ideas. Lefties should be far more concerned with the billions our tax dollars up in smoke with the demise of the much S U B S I D I S E D solar industry.
RE: The lefties I work with are all up in arms about the subsidies that the oil companies receive
Firstly, let’s be clear on what we mean by “subsidies”.
For example, Let’s say a mafia Don threatens your business if you don’t give his gang $10,000 a year in protection money. Then one fine day, he dies and a new Don takes over. He decides to only take $5000 from you. Is he “subsidizing” you to the tune of $5,000 now? or is he taking less from what you earn?
When the left talks about “subsidizing” big oil, they’re lamenting that they should be TAKING MORE of their money instead of the money they are already taking and then on that basis call the money they have not taken a “subsidy”.
Ask them to name the tax break they want to cut, the domestic manufacturing credit, foreign income, etc... (but let them name them, don't tell them which exist)
Now are they in favor or cutting this domestic business tax break to all industries, or are they trying to uniquely punish a particular industry?
The U.S. oil and natural gas industry does not receive tax subsidies. It delivers $86 million a day to the federal government in revenue, mostly income taxes.
There is not a single targeted tax credit in the Internal Revenue Code available to the oil and natural gas industry. The industry is allowed to take deductions to recover costs of doing business, which has been allowed to all businesses since the inception of our countrys income tax system.
More details at:
Naw...The supply is controlled to control the price...
You can say: Federal subsidies (which is another way of saying your money) for so-called green energy amounted to $24 billion in 2011. Thats not counting the $25 billion in loans primarily to producers of advanced vehicles, generators of solar power and manufacturers of solar equipment.
Oil companies got $3.4 billion in tax preferences."
Then this might be a good time to point out the difference between subsidies (giving someone else your money), government loans (lending someone else your money) and tax preferences (letting you keep your own money).
The petroleum industry is way, way down the list in terms of profits. The government makes more per gallon of gas that any big oil company does.
February 24, 2012, 10-K Annual Report
Page 56, Consolidated Statement of Income
All numbers below in millions of dollars.
Total revenues and other income = 486,429 (100%)
Sales-based taxes = 33,503
Other taxes and duties = 39,973
Income taxes = 73,257
Total Taxes = 146,733 (30%)
Net Income = 41,060 (8%)
- - - - -
Total revenues and other income = 383,221 (100%)
Sales-based taxes = 28,547
Other taxes and duties = 36,118
Income taxes = 52,959
Total Taxes = 117,624 (31%)
Net Income = 30,460 (8%)
- - - - -
Total revenues and other income = 310,586 (100%)
Sales-based taxes = 25,936
Other taxes and duties = 34,819
Income taxes = 34,777
Total Taxes = 95,532 (31%)
Net Income = 19,280 (6%)
- - - - -
If they say something like $41 Billion in profit is too much, reply with $147 billion in taxes is too much. Ask if they know how many people ExxonMobil employees, how many retires hold their stock, directly or through mutual funds?
What gives gas stations the right to raise a gallon of gas 6 cents overnight?
Burning liberal brains in the AM smells so sweet!
Still waiting for a Detailed analysis of the MASSIVE SUBSIDIES and SPECIAL TAX BREAKS Big Hollywood receives as well as the Court Jesters that perform in the minstrel shows they produce. I mean after all we are treated weekly with The Amount of Money each Movie made on virtually every news channel in America. Shouldn’t Big Hollywood be able to survive WITHOUT TAXPAYER SUBSIDIES??? This is Tax Season, look at your form and you will Find a SPECIFIC DEDUCTION for Court Jester, WHY???? while we are at it, I have not seen a detailed anaylsis on the MASSIVE POLLUTION and WASTED ENERGY by Big Hollywood since Rush’s first Book. WHY??? Change the Storyline to Big Hollywood and use their own Arguments against them while showing pictures of their Lavish Houses paid for TAXPAYER SUBSIDIES.
“The supply is controlled to control the price...”
You notice how the lowest earnings according to the chart seekandfind posted are in food. Think that is connected to the fact that the supply and price of food was the first “sector” the federal government seized control of?
The oil companies do not get subsidies. A subsidy is money given to an organization out of government funds. The oil companies take tax deductions just like every other business -- they are not given money.
Just as a business can depreciate a piece of equipment or an entire plant, the oil companies are allowed a depletion allowance on their wells which reflects the dropping value due to the oil being pumped out.
An example of a subsidy would be the $1/2 billion that taxpayers will give to the banks that lent Solyndra money. Make sure your lefty colleagues understand what a subsidy really is and don't allow them to misuse it in your presence.
Oil companies do not get subsidies. They get the same “deductions” as every other company. A truck driver gets to write off the declining value of his truck each year, an oil company gets to write off the declining value of an oil field as the oil is extracted from it.
Oil companies profits are well in line with most other major companies in this country but the question I have is why are there reports that fuel has become our biggest EXPORT!
Are you serious?
6 cents a week every week? Now we are up too 3.99 a gallon. I just don't understand I guess.
Many years of expanding and upgrading our existing refineries, combined with falling demand in the US, has finally put the US with surplus refinery capacity.
So now we import a little more crude oil than we need, refine it, and export the higher value product.
It helps our trade balance, it keeps more jobs in the US, it keeps a surplus capacity running so when we need it (more demand, refinery explosion, etc) it is already running and online.
What is wrong with that?
It makes a great sound byte, but there is no substance to it. The alleged "subsidies" are the same tax write-offs for depreciation, business costs, depletion that are available to any company. They simply want the "evil" oil companies to be held to a different standard.
You gotta ask yourself, "Who's doing the gouging?"
And gas is 4.00 a gallon. THAT IS WHAT IS WRONG!
And most of our oil used by the refineries is imported. That price is over $120 a barrel.
Gasoline is high for the same reason jewelry is high, the materials used to make them, crude oil and gold, has gotten very expensive.
Increase the supply of oil worldwide more than the increases in worldwide demand and it will bring down the price.
Answer the question. “Why is fuel the highest export for America?????” Gas is four dollars a gallon and we are exporting??? There is talk of opening our strategic oil supply and we are exporting fuel???
As I said above, we export refined products because we make more than we use. It is the highest dollar value export because nothing else has the volume and price combination.
There is talk of opening our strategic oil supply and we are exporting fuel???
You are comparing wheat and bread, or gold and jewelry. Refined Products are not crude oil. We are still importing a huge amount of crude oil, more than we produce ourselves. And using the SPR when no reduction of supply exists is the same mentality of paying your medical bills by getting rid of your insurance policy. It is only considered by fools and politicians, but I repeat myself.
Do you think the cost of cars, computers, etc would go down in price if we forbid their export? Refined Product is a finished product, crude oil is a raw material used to make the product. They are not interchangeable.
Do you think we would be better off shutting down more refineries, loosing more jobs, not having any surplus refining capacity? Refineries are not going to produce more product than can be sold. They are not going to operate at a loss. If you want to see the price of gasoline come down, we need to execute policy that puts more oil on the market and not just in the central states away from the ports.
So the answer is to keep importing more oil than we use at inflated prices to increase our debt. Combined with the devalued dollar it makes no sense to continue to go deeper into the hole to sell refined product at that devalued dollar, press on with the recession to to assure refinery jobs when the refineries would be used to full capacity when the recession is defeated.
Since we are already exporting a high volume of refined product how is bringing more oil into the country going to solve that? Supply and demand, if more oil is brought into the country and more is exported what changes.
Use the oil we are now importing in this country, reduce the price of fuel to allow industry to grow again. Industry will mean jobs, jobs will mean more fuel will be used and refineries will sell what they produce in this country and not to the world market and eventually Iran.
Just the opposite. The refined products sell for more than the crude oil. So every extra barrel crude oil imported over our domestic use, and exported as refined fuel improves our trade balance with positive dollars coming into the country.
if more oil is brought into the country and more is exported what changes
It is not crude oil coming out of our refineries. It is higher value refined product. Think of it as importing steel and exporting cars.
reduce the price of fuel
That will require more crude oil on the market or less demand or a combination of both. Setting up other nations refine more while we refine less is NOT going to lower the price of gasoline in the US.
Apparently there is a technical answer and a logical answer.
Do you really not understand the buying a million barrels of oil at $125 and selling the refined products from the same at $145 is good for a trade balance?
Let us handle these one point at a time. Do we agree solely on the trade balance issue?