Yesterday, ExxonMobil announced its second-quarter results – recording earnings of $10.7 billion.
And while commentators talk about the contribution of this result to the company’s bottom line, it’s also important to note that it’s good for America’s bottom line, too. As I’ve talked about in previous posts, ExxonMobil contributes billions into the U.S. economy through federal and state taxes, royalties, jobs and capital projects while helping ensure continued supply of energy for U.S. consumers and businesses.
These contributions add up. For example, in the first half of 2011, for every dollar that ExxonMobil earned, we contributed almost five dollars to the U.S. economy. And that’s not even counting salaries, office expenses and other costs we incur in the United States.
When you take a look at the impact of our activities on the global economy, the results are even more significant. This chart shows the positive impact we’ve had on the economy in the first half of this year arising from the investments we make in running our business, developing new projects, paying taxes and generating returns for shareholders. Payments into the worldwide economy of $112 billion for the first half compares to our earnings of $21 billion for the same period.
I know this runs counter to the old stereotype – resurrected most recently during debt talks in Washington – that oil and gas companies don’t contribute enough to the economy. Or the myth that we enjoy “excessive” profits.
But these stereotypes ignore the truth. In fact, ExxonMobil is one of the largest taxpayers in the United States, and our profits are in line – or below – many other U.S. industries. Let me share some details:
- In the first half of this year, ExxonMobil incurred $6.7 billion in tax expenses in the U.S. on $5.5 billion in operating earnings in the U.S. Over the past five years (2006-2010), our total U.S tax expense was almost $59 billion, which is $18 billion more than the company’s operating earnings in the U.S. during the same period.
- ExxonMobil earned about 8.5 cents for every dollar of global revenue in the second quarter. That’s less than half the earnings-per-dollar-of-sales of many companies producing pharmaceuticals, beverages, tobacco and computers, just to name a few examples.
- For every gallon of gasoline and other products ExxonMobil refined and sold in the U.S. in the second quarter, we earned about 8 cents, far less than the 40 to 60 cents per gallon collected by the federal and state governments in gasoline taxes. And, as I discussed last week, the price of gasoline is determined by crude oil, a globally traded commodity whose price is influenced by a multitude of factors.
- Of course, ExxonMobil is not the only oil and gas company that is generating economic benefits for the nation. As I mentioned earlier this week, the oil and gas industry delivered $476 billion in benefits to the U.S. economy in 2010 – more than three times the amount it earned – and is one of the few U.S. industries that have added a significant number of jobs in recent years.
Despite these facts, some in Washington perpetuate the myth that ExxonMobil and other U.S. oil and gas companies make undue profits, and don’t pay their fair share of taxes. President Obama himself, in his address to the nation Monday evening, suggested we can fix our fiscal challenges by having oil companies “give up tax breaks that other companies don’t get.”
This is simply not the case. These so-called “tax breaks” are legitimate tax provisions designed to keep U.S. companies internationally competitive – and to help keep American jobs from being exported to other countries.
Investing in the energy for economic recovery
To meet the world’s energy needs, ExxonMobil continues to invest heavily in new energy projects, both in the U.S. and around the world. Even during the recent global economic recession, these investments – which have a multiplier effect on job creation and tax revenue – have risen in order to keep pace with projected long-term increases in global energy demand:
- In the second quarter, ExxonMobil’s investments to find and produce new supplies of oil and natural gas reached a record $10.3 billion, which includes $4.3 billion here in the United States.
- Some of the major projects that ExxonMobil is working on include increasing natural gas production from shale formations in multiple U.S. states and developing Canada’s oil sands, which can provide decades of oil supplies for U.S. consumers. This quarter, we announced two major oil discoveries and a gas discovery in the Gulf of Mexico after drilling the company’s first post-moratorium deepwater exploration well.
- Last year, our total capital spending of $32 billion exceeded our earnings by more than $1.7 billion; over the next five years, ExxonMobil plans to invest between $165 billion and $180 billion on new energy supplies.
ExxonMobil and other U.S. energy companies will need to continue to invest in new energy projects in order to keep pace with global energy demand.
We could be investing more in the United States, creating more jobs and paying more taxes, if the federal government would open up more of America’s oil and gas resources for exploration. Even today, with the need for U.S. jobs and revenue at the top of the policy agenda, large amounts of our nation’s energy resources remain off-limits, and energy companies have not been allowed to return fully to work in the Gulf of Mexico.