This week the Administration is expected to announce its proposals for paying for the president’s new jobs plan.
Judging by last week’s speech, it seems likely that there will be another attempt to use oil companies as the “pay for” to fund programs outlined in the president’s address. If so, unfortunately this appears to be the latest effort in advocating for hiking oil and natural gas company taxes as a misguided solution to the country’s economic challenges.
The irony is that, rather than raising taxes on oil companies to subsidize jobs in other areas, the Administration has a much more effective and immediate solution right in front of it. The oil and natural gas industry stands ready, willing and able to create new jobs now – and without taxpayer support. The industry just needs the right policy settings to do so.
As I mentioned last week, a recent study shows that our industry could create 1 million jobs in under a decade and $800 billion in government revenue by 2030 if the U.S. enacted policies to support domestic oil and gas development. That’s on top of the 9.2 million jobs the U.S. oil and natural gas industry already supports.
But the problem is our industry isn’t being used to its full potential. Much of the federal acreage in this country is off-limits to oil and natural gas exploration. Permitting, legal and regulatory delays have caused roadblocks to new oil and gas development. Protests and politics have delayed infrastructure projects such as pipelines that could put thousands to work.
We could be investing more and hiring more in the United States, but access to our nation’s resources is critical. Take a look at any of the recent success stories from Pennsylvania or Ohio to see proof of how access to energy supplies can boost job growth – or just look at the latest Labor Department numbers. The oil and gas industry added more than 9,000 jobs from June to August of this year while the country’s job growth as a whole remained stagnant.
Increasing taxes on the oil industry – such as removing the economy-wide Section 199 manufacturing tax deduction or eliminating “dual capacity” provisions that support U.S. international competitiveness – is not the way to create jobs in this country.
I think one of the most overlooked – or maybe misunderstood – aspects of this whole debate is the extent of who benefits from greater domestic energy production.
Last week, the president set up a false choice – suggesting to Americans that they could choose to support oil companies OR use oil companies’ profits to support small businesses.
The fact is our industry already supports small businesses. We spend millions – if not billions – of dollars on new oil and gas projects, and that’s because we require products, services, raw materials and expertise from countless businesses, both small and large. And that’s not just in our industry – small businesses across the country often depend on demand from large corporations to grow their business and hire new workers.
That’s the type of genuine, long-term investment and job growth the country needs – but unfortunately, it’s not the kind we’re going to get with proposals like raising taxes on oil companies.
If the plan is to use oil companies, let’s use them in the right way. Put us to work so we can put other businesses to work.
Nearly 3/4 of our trade deficit is linked to the importation of foreign oil. Right now, we are barrowing billions of dollars to pay for this oil which the American people can not afford. We then send the money to countries who hate us.
The writers of this article are aware that the US, due to our loopholes/deductions and easily game system, has the second lowest corporate taxes in the developed world. Behind… Iceland. In 2009, for example, Exxon paid ZERO federal income tax. So move to Iceland if you feel that your taxes are too high.
http://ctj.org/ctjinthenews/2011/09/npr_corporate_taxes_how_low_can_you_go.php http://thinkprogress.org/politics/2010/04/06/90299/exxon-tax/
Neil, your claim about ExxonMobil’s 2009 federal income tax just isn’t true. I addressed this long-standing erroneous claim in my blog post “Taking a look at our 10-K”: http://www.exxonmobilperspectives.com/2011/02/25/taking-a-look-at-our-10-k/. In fact, ExxonMobil’s income tax expense related to 2009 activities was approximately $500 million. If you don’t believe me, try reading the following analysis from Politifact, which found similar claims about ExxonMobil’s taxes to be untrue: http://www.politifact.com/truth-o-meter/statements/2010/dec/10/bernie-s/bernie-sanders-filibuster-exxon-mobil/.
The Politifact story makes clear that they believe the 10-K form incorrectly led readers to believe that Exxon paid no federal tax, when Exxon says it actually paid $500 million. Politifact states Exxon “declined to provide documentation for this number, however” but I’ll grant that I was incorrect about Exxon paying no federal tax in 2009.
As for sales and state taxes; they exist in almost all developed countries and they’re mostly deductible from the federal tax. In the interests of clarity, let’s stick w/federal corporate taxes?
So Exxon paid $500 million on $19 biillion in profit. Officially, the US corporate tax rate is 35%. In other years, I’m sure Exxon has paid an amount much closer to that, but as Exxon’s 2009 tax bill of 2.7% shows, our corporate tax code has so many loophooles that our rate is actually the 2nd lowest in the developed world.
Correct me if I’m wrong but don’t corporations just pass on their tax burden to their consumers by the way of increased costs to produce their goods or services. So in other words, the consumers end up paying the tax bill and so by increasing taxes on the corporations we’re just punishing the consumers??
Ken; How does an International Oil Corporation with home offices in the United States account for total taxes? Who do you pay your away from home taxes? Can you Itemize royalties to countries that you ae partners with on projects for the public to view?
I will really pay attention to your blog post, Taking a look at our 10-K, when you end the post listing your annual salary and bonuses along with the same info for other top executives. FYI: I have also read Exxon “articles” where the company says that Alaska is better now because of the clean up after the Exxon Valdez. You are a good writer but like Lincoln said, “You can’t fool all of the people all of the time.” Get an honest job and do something positive with your life.
I find it incredible that people will believe that Exxonmobil doesn’t pay Federal Income Tax but that when given the fact that the CEO of GM is paid more than GM paid in Federal Income Tax no one says a word about it. Neil you need to open your eyes to the real world. Corporations are not the enemy. Especially corporations that provide energy – the nations and the middle classes life blood.
I say force this administration to use green energy to put fossil energy workers back to work that will have a positive ripple effect throughout the local American economy. How? Place a bid for the now defunct company Solyndra. It will save 1,100 jobs. The catch is that the panels will be used to supply clean energy to a lignite to oil facility. It’s the bridge to the future market that will one day support a solar panel manufacturing business the size of Solyndra is currently, or when it was operating rather.
Would be headline:
“Big oil saves green jobs!” -Clean way to convert coal into oil on our soil found.
Can you imagine those headlines? The political and media fallout?
I say out PR strategize these clowns in Washington, and it’s a real doable solution too. Green jobs are in part designed to get us off foreign oil, so simply make it reality. How could they stop such a plan? Plus the additional tax loopholes that go along with green job creation turned around where a company like Exxon Mobil picks them up through a pure market opportunity where government funded job creation failed is a story just waiting… read more »
…to be told in the news cycle.
Solyndra is now bankrupt. Our tax dollars were thrown away because the current administration’s “green agenda” didn’t work. The government is not a corporation and cannot create jobs or anything else. All they can do is suck money from the private sector.
“Dual Capacity” via compeition seems like very colorful applications to the public in the United States but they have no education on International Monopolies like OPEC who “Price Fix” crude oil prices. Many countries have sued OPEC without any resolution via litigation or recourse. Thus it sounds like there is a monopoly on who gets the revenue from taxes paid on profits via OPEC/OPEC!!!! There are no International laws or monitoring of “price fixing”! I wonder if we as customers could get a straight answer on who Oil Corporations make more profits? National or International via partnerships with OPEC!!!
Actually, the price of oil is more controlled to the top side by the CFTC(america) and ICE(offshore. The Opec tends to set bottom pricing. The CFTC allowing speculation in Futures(Oil) by Goldman Sachs, JPM ect, both here and offshore(commodity exchanges) for those not involved intaking delivery, adds veryy signifigant cost to consumers and untold profits to drillers. Untold, because the Big Boys are also “offshored”.
The relationship between “Ofshore” drillers(supply) and speculators(demand) will never be held up to the light of day because there is no legal structure or authority to inspect this relationship.
Without spec contracts being the last 5% controlling interest in oil(5% being what is need(last 5%) and the interest is usually above 40%), pricing would drop to levels needed for profits, not allowing the huge recent profits quoted.
If you wish to see prices drop, complain in the right direction. If you’re just upset “oil” makes outrageous profits.. still.. blame propped up prices in the “oil” hedging market, and the oversight commitee that gets their Representatives reelected, by allowing the CFTC to pander to their fellow Trader compatriots.
Fellow bloggers one can get the weekly crude price from U.S. Energy Department statistics ie OPEC and NON-OPEC. It would be the averages!!. Wholesale price information would have to be researched via a very good friend of a wholesaler who sells many branded gasolines. That might not be “reality”! If ya own a fax machine you can get all branded and unbraned wholesale prices less taxes daily and many times a day. Trust me I still have sheets and sheets of prices just kept for historical theme.
Remember all taxes collected at the pump via state, local, federal, sales. Ask a dealer why he feels like a tax collector!!! Not royalties of course!!!!
You are a paid spokesman for this company; please add your annual salary and bonuses in the interest of full disclosure. Then add the same info for the top 250 executives (you can omit the names–would hate to embarrass the super-greedy)….then I will be able to do some better math. And, in the interest of full disclosure, please add the combined salaries for the 15,000 lowest paid employees. Then I can honestly begin to have a better, fully-informed understanding of how jobs are not created by a wealthy, environmentally destroying conglomerate. P.S. Kindly please also share detailed info about your off-shore companies in the interest of full disclosure. I really want to understand this issue of how jobs are not created!
Well Patty that is calling a spade a spade. Well done!!!!
What does the author’s salary or any salary of execs have to do with paying corp taxes???….nothing!! Are you a shareholder??..if you’re not you have as much to say about their salaries as I have to say about yours. If you are a shareholder then I suggest you do so through shareholder meetings. What you don’t know is that over 44% of EM is owned by pension funds and 401Ks and another 30+% is owned by institutional investors with the remainder owned by individuals. Largest individual stock holder has .19%….3rd largest stock holder is a NH Government Pension Plan..so profits are goiing to Teachers, Police and Fire Retirees. I don’t work for EM BTW. More taxes justs takes away from Pension funds, IRAs, and other investment instruments…many owned by unknowingly by regular people.
Dear Ken
You said in your post that the oil companies can create a million jobs if given the policies, but I wonder… why is ExxonMobil opening offices outside US?
By now more and more ExxonMobil departments are moved to other countries… Doesn’t that affect US Exxon employees? I understand the move from the companies point of view, there are many countries that offers good and cheep employees, but the ones in the US aren’t fired since they are needed no more? If by outsourcing many company departments to other countries Exxon is firing people how can we trust that the company will use the “correct” policies to create more jobs?
Contrary to some opinion “Higher taxes on oil companies won’t create jobs” neither will higher stiffle jobs. More jobs=more demand..and developement will happen regardless because Bondholders demand “oil” companies find more reserves and bring oil out of the ground. If Oil companies don’t want more taxes/developless, prices go up-someone will drill..period.
Are we all so ignorant to the simple facts that oil, natural gas, coal, and non-silicate minerals are non-renewable and will only end in the loss of jobs? The pollution and environmental degradation caused by the use of non-renewable resources, from the mining all the way to the landfill are a waste and everyone knows that any jobs created are only temporary. We only have 40 years left of oil. Tar sands, shales, even natural gas are pointless and those jobs will only last a short whlie. A good example of this are the ghost towns that thrived on coal mines. The same will happen. I’m so glad everyone on this web site cares about their children. Nature can not be fooled.
I love how the tenor of many of the comments is in step with the Obama administration’s what’s yours is not yours. The university system is doing a great job indoctrinating young socialists. We assume blindly that big Oil is evil – because it is big. Unfortunately, small businesses cannot compete in many sectors of the oil business due to the large investments required and also due to the requirements of big government. However, as noted, many small businesses support the operations of these large oil companies that are driven purely by profit. What a beautiful concept – no special interests except profit. Unlike big government that is driven purely by special interests and cronies, with the facade of helping the little guy while enslaving them. Big government is the real evil player in this mess, it always is. So, Big Government wants a higher take from the successful oil business to fund its Big Government “investments” in special interests and union jobs and more giveaways and more dependence and jobs for everyone and school for everyone and healthcare for everyone paid for by……. everyone else? Who is left?
What has big… read more »
…government ever done for society? You might buy the socialist commercial that we all can be like France. Sooner or later Big Government consumes its people and that is happening now in Europe. Name me a totalitarian government that was great for its people……..right, you can’t. So please, take the ridiculous socialist concepts of if everyone had a job more demand would be created and please let the private sector show the way. These big evil capitalist companies are the real job creators and engines of growth – get out of their way and let them go.
The rest of you can drive around in your hybrid – until your charge runs out and then either kick in the gas (thanks Big Oil) or plug into big coal and relax and enjoy your hemp.
Peace to you all!
We all understand the realities of trade defacits, but what we dont understand is that these trade defacits never existed when the free market was allowed to regulate temselves, it only started when Billy clinton decided that NAFTA was good for america. While in theary it is very good for america, even in practice free trade is good, what is not good is allowing one central entity that has governement powers to do this. If we would allow the people with the items to sell to make there own trading deals without government intrusion we would be much better off, and the trade values with all other countrys would be as they were before NAFTA, not perfect, but fluctuating back and self regulating themselves naturaly through the free market. GOD BLESS AMERICA. 2012 can come soon enough
As a stockholder of XOM, I wish they paid NO tax at all. Simply because, if they don’t do well, I don’t do well. Taxes are not their only concern. I am sure they have to spend a small fortune on legal costs. Then whenever there is an oil spill, they have to pay dearly for it. “BIG OIL” is not the enemy. They provide a much needed product for the consumer at an affordable price and provide jobs. The Exxon Valdez incident is history, and should be put to rest. Buy their stock. Invest in them.
What, if anything, is being done to stop H.R. 3784 (“Gas Price Spike Act of 2012″)? This piece of legislation is nothing but a business and jobs destroyer.
How can the government determine “reasonable profits” if they cannot even agree on how to balance their own budget?
Personally, I am not that concerned with gas prices. What I DO care about are the oil and gas services companies, because I own their stock. If they don’t do well, I don’t do well.